This is done by clicking the MOD button from the Radio Operation > Radio List screen and selecting V Audio (instead of Mic).

The next thing is to convince the Remote Utility to send the audio from the software and not the microphone. Via the soundmixer affords you some more control over levels, but on my slow netbook uses unnecessary CPU resources. You may either select the Icom Virtual Audio device directly (as I have) or via the Microsoft Sound Mixer. Once this is done, you can fire up Fldigi 3.21.81 and proceed to the Soundcard setup. Next open the Control Utility, go into Connect Settings, and disable the feature to turn off the transceiver when the control software is closed (since we need it left on for Fldigi), You can use any port, you just need to substitute it throughout. The virtual CI-V com port is set here to COM5. Here my settings are shown from the Icom Remote Utility screen. You can ignore the bit at the end of the video where I am trying to get Fldigi working there. Remember the com port you assign at the virtual port stage, since you will need this to interface with Fldigi. See my Youtube video for some more information on that.

I configure the Icom RS-BA1 in the usual way. I guess you could use Ham Radio Deluxe or any other mode that supports CAT/CI-V control of the radio (especially PTT), but I use Fldigi and a few of Joe Taylor programs (WSPR, WSJT, etc) since they continue to support newer radios for free. To start with, I am using Icom RS-BA1 version 1.60 and Fldigi 3.21.81. Just some very loose notes about using various digital modes via the Icom RS-BA1 remote control software to a remote Icom IC7700 (ver2) via LAN.

Ham radio deluxe tutorial