I use the same set up. What I do is use the headphone jack plugged in to my line in. You need to check your mixer in the taskbar(the yellow speaker), or go to your sound card options. Double click, you will see faders for play control, wave, and so on. Click options, properties, and check recording and hit enter. Make sure line in is selected once you do this. I know I'm not great at giving directions, so if I can help clear anything up, let me know. Btw, I have a SB Live! sound card. If you use MS Gamevoice, or anything like it, this might be a good place to start. Even if it isn't the problem, it's good to be familiar with the mixer on your sound card. Good luck.
