I had been trying to record some audio of about 4 minutes in length or so with Windows 7.  After about a minute in, the sound would become muffled and degraded quality.  I tried adjusting microphone level balance and boost levels to no avail.
After a while looking through the recording options, I later looked at the Communications tab of the sound options.  It was set to “Reduce the volume of other sounds by 80%” when Windows detects communications activity.  I changed it to “Do Nothing” and tried again to find that it did not suffer from any sound degradation.  I also noted that the degradation was in the actual recording itself and not just during playback. [more]