I am not a fan of this software, but since i have carpal tunnel from 30 years of clicking away foolishly, I just started using it to dictate articles into Word (3000+ words per day). It works! But I thought that the requirement for a USB noise canceling microphone was nuts for a studio with a closet full of cartoids and dynamics the size of small dogs. So I tried configuring the iMac internal mic with some software you probably already know about: LineIn and soundflower inputs. Download LineIn from our friends at Rogue Ameoba, responsible for fine software like Airfoil for the AirPort Express. It's free and very useful regardless. Then install Mac Dictate and let it complain that you don't have a noise canceling certified by Macspeech expensive tacky microphone. Who cares, we have a way around that. Now, close down Mac Dictate and set up your internal mic using LineIn:
Set
Input from: to
Built-in Microphone
Set Output to: to Soundflower (2ch)
then click
Pass Thru
Open Mac Dictate and you are off to training camp, having fooled Mac Dictate into thinking that you have a valid dictation mic. On my newer 20" iMac with 4gb, Mac Dictate works great with the internal mic, and really cuts down on my typing. Plus I saved 80$ on a mic I would only use for this program.
I have not tested on other Macs, like an MB or MBP, but I think it might work (others who have tried, please post). But it might not, as I have noticed the iMac mic is very good for a built-in, perhaps the best I have ever heard in that class, and the other not so good. Well, good luck!