If Skype isn’t running then I can’t see how it could be the cause of the problem.
The only other thing I can suggest is lowering the “levels” on “microphone properties”, if Window7 is like Vista it will be a couple of on-screen sliders …
Also if you have another microphone you should try that just to see if the problem is microphone specific.
BTW just found this in an Amazon review …
When Windows XP built-in USB sound card driver is installed, > AGC checkbox is avaialble in advanced mic property dialog box> .
When C-Media USB driver is installed, AGC is gone and Microphone boost (+20db) option shows up.
So apparently the AGC tickbox, if it exists, is in the “Advanced” microphone properties, not “Microphone Enhancements” as I stated earlier.