Well - it was my damn mic the whole time - I can't believe it!
I tested my mic on another PC with XP and it seemed to work ok, but maybe it wasn't working as well as I thought - and the playback volume was just really high.
I finally found an old headset with mic tonight and hooked it up to the X-Fi Extreme, and the mic came through loud and clear.
Time for a new headset! I'm thinking SteelSeries 5h v2.
I feel like an idiot.