Microphone feedback on Acer LaptopFollow

So, I've borrowed an Acer laptop. Acer Aspire 5600 to be precise. As usual with Acer, something or other is ****** up. In this case, the microphone hardware/software/settings/something or other.

The Microphone picks up my outbound playback (with or without headphones) and treats it like inbound. This happens whether I use external mick or just the onboard pissy little microphone. Ooooh, I thought. It's just a problem with the settings. Someone's put outbound as inbound and thus we've gotten this problem. Buuut, apparently they didn't. I can't find a single setting where outbound loops back into inbound.

What I've done:

Control Panel -> Sounds and Audio Devices -> Audio:

Sound Playback: Realtek HD Audio output
Sound Recording: Realtek HD Audio input

Control Panel -> Sounds and Audio Devices -> Voice:

Voice Playback: Realtek HD Audio output
Voice Recording: Realtek HD Audio input


This looks about right, right? Nope, it's apparently not. It somehow crosses input and output regardless of my settings. When I use the "test Hardware" button, I get to talk into the mick and watch a pretty green bar bounce. When I test inbound and outbound simultaneously I get an ever increasing hellsound screaching through my Koss headphones or Laptop speakers. Infinite loop.

There's this "Realtek HD Sound Effect Manager" thing on the Control Panel as well, but I couldn't find any relevant settings there either.

Is there anyone here who knows what the hell is up with this retarded little piece of hardware?