Your problem might be/is (since I have encountered these problems before, maybe not the mic one)
1. With Cubase 7.0.5 or 7.5 (these are the same products), you´ll need a midi device linked to your computer somehow. I myself run a keyboard of the brand and kind "M-Audio Keystation 49es", it has 49 keys on it (thereof the 49es) So...you need the device (a physical device) (or you may not, I sadly don´t know it yet since I´ve had Cubase 7.5 for around 2 months now), I may also add that my device is USB ported and can therefor be plugged into my computer at once, no bullshit, just "here-you-go".
THE REAL ANSWER IS HERE, sry for the detail: You need a device, you need to have it plugged in. You start up your choosen device BEFORE you START UP Cubase, since during the beginning of loading up Cubase, every devices, midi input/outputs etc. loads, and that is why.
After this, you start up Cubase, and in Cubase you hover over the top panel "Devices", click on it and go down to "VST Connections", click on it. A section of "Inputs and "Outputs" connections will be dissplayed (if everything goes as planned that is.), here click on the "Inputs" section. The section "Audio device" in the bar dissplays what type of sound driver/device you have (like an extended device as I have: "Focusrite Usb 2.0 Audio Driver" or an internal driver, as (something something). Go to "Device Port" and right click (with you mouse) on "Input 1" or "Input 2" to change the sound input. The same goes for "Outputs", make sure all of your devices go through the input section and out through your speakers on the output section. So you delete the current input and outputs and press on the "Add Bus", this is where you simple choose what kind of drivers you want where, left speaker or right speaker, or through both speakers, and to use. Now exit the "VST Connections" area.
And head out to "Devices" - "VST Instruments", now the fun starts. Click on it, and a bar will pop up, you can add any plug-in that you currently have installed in Cubase. Select any you want: Let´s take "HALion Sonic SE" under the section "no instruments". So now, wait until it has uploaded (the Plug-In), and before this a bar with the message "Do you want to create a MIDI assigned track to "HALion Sonic SE", in this case (since you are a beginner of the program) click "Create". Now everything should have uploaded, this brings you into the actual Plug-In, here you can do too many stuff to even remember.
Inside the Plug-In: If everything is connected proparly through your "VST Connections" section or that you have a good enough soundcard, a midi device (such as a keyboard) and drivers that work fine, you should be pretty much done to use midi. press a key on your keyboard (let´s say you have one) and if everything is fine there should come a sound from your speakers now, that is unless you haven´t turned them off or simply have forgotten to raise the volume on your computer (or speakers, if that was/is the case).
2. When recording an audio, you must make sure that your input and output directories are connected proparly, do the very same connection bit as I wrote earlier under "VST Connections". And also, turn your instrument on, or mic in this case. And have the right drivers for your computer, Mic and Cubase installed.
3. Itunes may be a large program when running it, requires some CPU usage, however we shall barely speak about how much an uncompressed sound can take on the CPU usage. I mean that Cubase is such a demanding program that you in this case either need an extended sound card, since your current can´t handle it, or get a better computer or extended CPU that can help your current one.
4. The same goes for videos, since internet can take up alot of CPU usage, I recomend you to get an external sound card, mine as I said is a "Focusrite 2I2 2.0 Audio Driver".
Yeah Cubase demands and if this wasn´t what you were looking for then I can´t help you. Sry for making you read such a CPU heavy usage post, Lol.
J/k. I have no idea about this one.
and does not have an audio out jack. Cubase can use only one device at a time. If you select the snowball as your input device, you have no output device. Not sure how you did it before. You might trick Cubase into using your computer speakers with the snowball if you use ASIO4ALL, but I'm not positive that will work.
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