I get a lot of questions about dictation in Windows Speech Recognition for Vista. One of the most frequent questions is why dictation doesn't work in a particular application. The short answer is that dictation relies on a technology called Text Services Framework to interact with applications. If the application doesn't support it, then dictation doesn't work well. There is a very basic form of dictation support that can be activated when you check 'Enable Dictation Everywhere' in the Options submenu of the speech recognition context menu (right-click on the speech recognition UI).
What applications support Text Services Framework? Well, I know that the following applications definitely support Text Services Framework:
I also know that the following applications do NOT support Text Services Framework:
Dictation should work in any program that uses plain text controls or richedit controls, as well.