The Following information applies to:

Home Studio 2
Home Studio 2002
Home Studio 2004

Under Options | Audio | Input Monitoring, unselect all of the drivers. Then, double click on the yellow speaker icon on the bottom right corner of your screen (or choose Start | Programs | Accessories | Multimedia | Volume Control). Then choose Options | Properties | Adjust Volume For Playback, and make sure all boxes below are checked. Click OK. Make sure the Mute Box is NOT checked under Line or MIC Balance and adjust the level. Close it and try again