In my current campaign, the players have set up recording devices to eavesdrop on some NPC conversations. Rather than telling the players what they'd heard, I wanted to let them listen to actual recordings.
I asked some friends to record snippets of conversation, with each friend recording the parts for a particular NPC. Each person got the full script, with both sides of the conversation, so that they had context for their lines. They each recorded their parts separately, to avoid problems finding mutually-suitable times. They recorded their parts on their phone, then emailed the audio files to me. I then used the steps below to create the audio files for the players.
Import the snippets into Audacity. Each should be a mono track. If any are imported as stereo, use menu item Tracks→Stereo Track to Mono to convert them to mono tracks.
To get the volumes roughly similar, do the following for each snippet:
Cut, paste, and move the snippets around so that they are in the correct order. The Selection Tool can be used to select part of a track, which can then be cut and pasted somewhere else. The Time Shift Tool can be used to change the start time of a track.
Optionally, you can use the slider to the left of the track to adjust the balance. This can be used to have one person in the left channel, and another in the right channel.
Adding low-level noise helps to make the recording sound more authentic, and also masks the differences that result from using a variety of devices to record the snippets.
Add a track (Tracks→Add New→Mono Track).
Click in the new track and press the Home key, then hold down the Shift key and press End. This will select the whole track, so that the noise generated will be the correct length.
Go to menu item Generate→Noise….
Set Noise type to Pink, Amplitude to 0.1. Duration will already be set to the correct length.
If the recording should be of low quality for some reason, you may wish to set a higher amplitude for the noise. You could also experiment with other types of noise, add effects, etc.
Use the play/pause/stop buttons on the toolbar to listen to the audio and check it.
Once you're happy, go to menu item File→Export Audio… to export it to a suitable format. MP3 format with the default format options is a good choice.