1) record from the stereo system via the mic input (or through an additional audio PCI card or USB audio equipment) to audio aiff files.
2) split and/or edit the files (with Audacity for example).
3) burn the CDs with iTunes (for free) or Toast (from Roxio).
For the sofware a look at http://www.pure-mac.com/audio.html
That are just the basics... Hope it helps.