Yep… No audio over the USB connection, its straight MIDI over USB.
Once you get an audio input to your computer, just plug in the LP audio out to it (you may need an adapter if you are using the 1/8th inch jacks that are native to stock computer sound cards). Keep the USB plugged in to the LP. In Ableton, create a Midi track and throw the external instrument on it. In the external instrument device, send midi to the little phatty (it should show up on the drop down), and then you have to select where to recieve audio from. Ableton should give you a drop down list of available audio inputs (if your audio input doesnt show up, you have to go to the preferences window, select audio tab, and configure your inputs/outputs). Its sometimes easy to see this by playing the LP and seeing which audio source has signal (the meter bar will fill up). With this set up, you’ll be able to play the little phatty’s keys and hear/record midi to the computer on the external instrument track. To hear the audio being returned from the LP, you’ll have to turn the monitor button on. If you want to listen and record audio, create an audio track and set the input as external, and then select the audio input of the LP. Again, hit the monitor button to hear the audio. Turn off the audio from section in the external instrument. If you dont record a seperate track of audio, when you render your project, Ableton will render at real time activating the LP and recording its output. Also, if you disconnect the LP, ableton wont have any source audio material, nor will it find the Lp to send midi to, so your track will be silent.
With this set up, both external instrument midi track and audio track, you can play the LP recording both the midi notes on the midi track, and the audio on the audio track (together, or record it out after you record the midi), and you can use the midi track to send additional midi instructions to the LP via the envelope tab on the clip (select MIDI Control and you’ll get a huge list of CCs to choose from).
Anyway, thats a lot of information. I usually record midi to Ableton, quanitize it (cause im a terrible technical player), then send it back out to the LP and record the output audio. Often times, i add automation to control the LP also by recording many different parameters into the midi track (by using the LP controls, or drawing them in) that should all be executed on the LP when i record the audio…
Hope that helps, and sorry if its a lot of info… /rant