Thanks for your responce, I'll try to be more clear about this.
It's a laptop that we both have, speakers are defintly working on both.
The same thing happens on my side that happens on hers.
When camming what she is playing threw her laptop, I can't hear it...but I hear her, tv, dog and such in the background.
So we tried doing it from my end, I put on a song threw itunes & youtube...i could hear it perfectly but she couldn't. The only thing she could hear was me when I talked.
So it wouldn't be anything with the mute has we can hear our own files we play.
I've went threw all the sound options in control panel I just can't figure it out.
I'm usually pretty good with this stuff. Seems like something so simple.
Whatever this settings is only blocks out the noises my laptop or her laptop makes.
If you use msn & have a webcam, try it with a friend it may make more sense to what i'm saying...play a song and see if they hear it.. and off course using win 7 on Win Xp it works fine! We both have new laptops, i really don't think there is anything wrong other than a setting that I cant find.