Annoying. Mine worked fine so it's annoying yours doesn't. I extracted the iSight drivers from the bootcamp app and ran this in XP. After it created the iSight folder under program files I cancelled just after I copied the iSight folder to my desktop. When iSight was detected I got a load of prompts to install my XP disk. i didn't have it so downloaded the iso from my msdn account and spent the next 10 minutes ok'ing and selecting the CD drive.
Finally I selected the iSight driver and it all worked. microphone is fine and I even made a skype test call with it.
sill question.. but have you guys been into Start > Accessories > Volume Control and made sure that on the Playback properties, the microphone isnt Muted and in File > Properties > Recording tha the mic is selected and the volume level is raised up ?