I'm running Windows 8 Pro x64 using an official Microsoft Xbox 360 wired headset which is plugged into an Afterglow Xbox 360 controller, connected to my computer via USB. The computer recognizes that it is a headset device, listed under Sound, video and game controllers as Headset (Afterglow Gamepad for Xbox 360). In the Recording devices menu it appears as Headset Microphone and is the default device on my system. In the Levels tab, it is at 100 with no option for boost. The driver being used is the Windows Driver Update automatically found USB Audio Device. The device is enabled.
My problem lies in the fact that while recording the headset audio, it is nearly impossible to hear anything that is being said unless the microphone is millimeters away from my lips, at which point problems such as breathing into the microphone, hard consonants, and the like become persistent. I can turn up the audio afterwards, but then I can't use it in a variety of programs I need it for, namely VirtualDub via Virtual Audio Cable.
During calls on Google+ or Skype, the recipients have to set their audio far beyond their usual limits just to hear anything that is being said.
What could be the cause of this, and even better, how can I fix it?
Edit: I should also add that the controller itself is using the Xbox 360 controller drivers supplied by Microsoft's hardware downloads webpage (using the Windows 7 x64 drivers as a supplement).