My boss has an IBM Thinkpad I-Series 1400, with Windows 2000 in Florida. We are trying to use Skype to communicate between Florida and Northern Ontario, so I am trying to troubleshoot this from up here. When we connect, he hears me very well but I am unable to hear him. I looked at the Volume Control Dialog Box in Playback his Microphone is not muted and the volume bar is up. Under Recording the microphone is selected.
Last year we used MSN messenger to communicate without problems. I even tried using Messenger Audio Tuning Wizard to see if it can detect it without luck.

Further to the above, an external microphone was installed and is working. The sound it is producing is not as clear as the internal microphone when it was working.