Can confirm it's the Line In after running into the same issue myself. I had a cable plugged in to the Line In and the other end to a tape deck for some digitizing. Anytime I booted up with that cable plugged in, I got the gray taskbar and the error message. I pulled it, shut down, started Windows, and everything was fine.

I'm using the Realtek chip on the motherboard, like half the planet. Driver date is 2/14/2012 & version is 6.0.1.6570. Now, off to go see if there's an update.