something I did to understand if it was a hard- or soft-ware problem was to plug a microphone in. For me the external microphone doesn't work either so I really think it's a software problem. Well, it could also mean my card has a problem, but at least it's not my internal microphone..I still have no microphone working for now.
I had a problem with a Dell xps. When upgrading from Vista to W7, the internal microphone wouldn't work with the W7 driver, and one had to get the vista driver to solve the problem. But it doesn't work here.