1) Make sure that your headphones and mic are completely plugged in & that they are in the correct ports. Windows vista and certain sound cards (including onboard) are able to detect the headphones / mic being unplugged and it will result in that error.

2) Make sure that you have the latest drivers for your sound card and that the software is installed and running. There is normally a program that starts with windows for the sound that comes with the drivers. Do not delete it from the startup.

3) Make sure you are running the latest version of DirectX