Control Panel -> Sounds and Audio Devices -> Click 'Advanced' in the 'Device Volume' box.
Now, check the 'mute' box under 'Microphone'.
If there is no mute box, go to Options -> Properties, then make sure the 'Playback' bubble is clicked, and then put a check in the 'Microphone' box in the list below. Hit ok, and then put a check in the 'mute' box under 'Microphone'.
That should solve your problem.