Microphone no longer works, since Freecorder

Hi there,
I recently installed Freecorder and find it very useful.
However, I have suddenly found that my microphone is not working. In the 'Sound & Audio Devices' Properties, only 'Stereo Mix' or 'SPDIF' can be ticked. It won't let me put a tick under 'Microphone' or anything else for that matter! And thereby lies the problem. I wondered if Freecorder was causing this problem, so I tried disabling all Freecorder's recording settings and suppressing it entirely in Internet Explorer, but short of actually uninstalling it altogether, I still can't change the settings in Sound & Audio Devices so that I can use my microphone in SKYPE and Windows Live messenger.
Of course I have tested my hardware in 'Voice Recording' in Sound & Audio Devices but when I try to play back what I have recorded, there is just an awful high-pitched noise coming from the speakers, yet the test says my hardware is working properly. I know the microphone itself is working because it actually does work in Freecorder. I can record my voice and play it back! :confused:
I am using Windows XP Home.