Chilli,
An HD audio device is often because the video card is HD capable and the person has connected to his monitor that has speakers or his HD TV with an HDMI cable. That can cause sound device conflicts.
I am leaning towards some sort of "device conflict" as the source of the problem. My suspicion arises from the absence of his headset device in the drop down list. Although it works, the volume control and mic boost, did not work.
JimmyC,
You can tune to yourself by putting your name inside of the radio V channel box (same way you tune to vox channel). You should then be able to hear your vox the same as others in game would hear it. That will confirm if your changes to mic boost are taking effect or not. Good luck sir, hope it does work.
From your DxDiag.txt:
Description: Speakers (Realtek High Definition Audio)
Default Sound Playback: No
Default Voice Playback: Yes
In my dxdiag.txt it lists my headset under speakers and default sound and voice playback are both "yes". Note, I do not have any external speakers connected, do you?