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This is the Audio Device Graph Isolation service, a part of Vista and 7's audio services. The real audiodg.exe is harmless, but like any file it could be infected. If it's not doing anything, it should be fine. The worst that can happen by ending it is your audio goes out, restarting your computer would fix that.
Using the Total Recorder user-mode audio driver will restrict your ability to record in Software recording mode. This issue is related to the significant changes in how the sound subsystem functions in Windows Vista. Total Recorder's user-mode audio driver cannot be set as a system default playback or recording device.