Windows 7: set up Speech Recognition error

I have run all the tutorials on the Speech Recognition program and had no problems whatsoever. The programs run perfectly and the computer hears me fine. However, when I attempt to run the Set up Speech Recognition program I never get anywhere. At the first window I read "Peter dictates to his computer.He perfers it to typing, and particularly perfers it to pen and paper." After I read it and hit next, it tells me the computer can't hear me even though when I was dictating the green bar that moves as you dictate was responding to my every word and went all the way to the red a couple of times. I don't have a clue as to why it works in the tutorials and not the set up. Anyone????

try running sound recorder , read in some text and then play it back.
listen for noise or distortion etc..

Did what you suggested raydeegragra and it recorded fine. There was a little background noise but the recording was fine.

I am a support tech for a national company and having issue in our software using voice and have install this on other version except for Windows 7 but can't get this to configured properly. Has anyone figured this out yet. I have a call in my open queue due to this error.