Did you try to uninstall whatever "it displays it as malfunctioned......so I went ahead and tried to use the update driver
Again, I'm assuming that you're seeing "it displayed as malfunctioned" in device mgr and you were still in device mgr when you "tried to use the update function". If you're not in device mgr, please elaborate.
About the services - Don't panic!
Does audio play - say thru Media Player? If so then audio is fine, if not well that's another issue. Let's focus on the mic on this thread. But I'm betting that you do have audio playback.
Run system information, export it to a text file, then post it in a reply - that will help.
open Windows help (fn 1 any empty area of your desktop) -> search for system information - > click on open system information then from the sysinfo file menu select export (to a text file). Attach that output to a reply here.
I'll be off for tonight 2300 est here. but will check back in the morning. That should give you some time to collect the Sysinfo and post it. Use the paperclip on the reply window to attach your output.