Hm, well I don't ever remember learning or hearing about muting arpeggios on a classical guitar. Maybe some other people have more insight though. While you're waiting check out some of these YouTube videos. These guys aren't muting their arpeggios.

http://www.youtube.com/watch?v=W2bwYihkj0Q
http://www.youtube.com/watch?v=IrGYe4VtWTI
http://www.youtube.com/watch?v=HT202WDYzxw
http://www.youtube.com/watch?v=eHa6V2PSFPI

I notice for a lot of classical music, it isn't always specifically stated that you need to let notes ring out. It isn't like electric guitar. It is kind of implied and expected for the notes to just ring since they decay naturally on their own, or you end up hitting the note again in about 3 seconds anyways in an arpeggio.