I found this donationware utility to use as a Windows Soundflower alternative, VB-Audio Virtual Cable - http://vb-audio.pagesperso-orange.fr/Cable/index.htm
To set up VB-Audio Virtual Cable for DiscoParty in Windows (7) to bypass microphone input:
1. Download the VB-Audio Virtual Cable driver: http://vbaudio.jcedeveloppement.com/Download_CABLE/VBCABLEDriver_Pack42b.zip
2. Unzip the download and run VBCABLE_Setup or VBCABLE_Setup_x64
2. Go into your Sound settings in Control Panel
3. In the Playback tab, right-click "CABLE Input" and select "Set as Default Device"
4. In the Recording tab, right-click "CABLE Output" and select "Set as Default Device"
5. Go into "CABLE Output" properties to check "Listen to this device" and select your usual output device in the drop-down menu (the device previously set as the default playback device on the Playback tab)
So essentially this configuration changes the path of your computer's sound output from
Windows -> Speakers
Windows -> CABLE Input -> CABLE Output -> Speakers
You'll probably want to turn off your microphone as well. You can do that by going to Control Panel > Sound > Recording > Microphone > Levels and clicking the speaker icon to toggle muting.
You can also just right click and disable the Microphone device, but note that Windows will hide your disabled Microphone device if you have Show Disabled Devices disabled (this is the default setting in Windows, right-click the Playback or Recording tabs to access and change this setting). You'll have to enable Show Disabled Devices to access and use your Microphone device again.
Note: my laptop volume hotkeys no longer control the music volume with this configuration. They are instead tied to the "CABLE Input" device, the new default device (DiscoParty seems to work independent of the "CABLE Input" volume level, so my volumes hotkeys effectively do nothing now). I have to manually click on the Windows volume settings to adjust the actual music volume with this configuration, which isn't a big deal if I'm going to leave my laptop sitting to run DiscoParty anyway.
There seem to be a few other potential Soundflower alternatives. I went with VB-Audio Virtual Cable because it seemed the easiest to setup. This one was the most mentioned: JACK - http://www.jackaudio.org/jack_on_windows