The Edit Sounds tab of the Preferences dialog contains settings that relate to editing sounds in a dedicated sound editor, like Audacity, Goldwave, Audition/Cool Edit, Soundbooth, etc. See "Using an external sound editor" for an overview of this process.
You can test these settings with the Test button. A sample sound is sent to the external editor.
Run which external editor
The "Run which external sound editor" box specifies how Springboard should find the external editor. Most sound editors register themselves with Windows as the default editor for the file types they support. Windows has two built-in ways an application can register itself to handle a given file type: Open and Edit. These work the same, but typically the Open verb is used for applications that are mainly quick viewers, and Edit is used by applications that can modify a file.
So, normally, your external sound editor should register itself with Windows under the Edit verb, and Springboard will work correctly without any changes in this dialog box.
If it does not work correctly - if you get an error message, or if the sound loads in the wrong program - you can try the other verb (Open vs. Edit), or you can choose "With this command line:" and click the button at the right of the edit box to browse for the program you want to run. This should work with most sound editors; unusual ones may also require extra symbols on this line called "command line arguments." This information should be provided in the documentation for your external program.