Steps for Playing Audio through Skype with Line In and Soundflower

I Googled this and found the answer in a couple of articles.

When you download Line-In you right click on the file and select Duplicate so that now you have two Line-In files. Name the other one Line-In2.
Open both.

Here are the settings:
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You can replace Blue Snowball with whatever Microphone or headset you have.  Press both Pass Thru buttons.

In Skype preferences set it like this:

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Finally in Sound preferences on your Mac set Output to Soundflower (16ch) and Input to your microphone or headset.