Bus429
something similiar happened to the wifes laptop, something somewhere changed the input device from microphone to line in, never did quite work out what it was or whether it just reverted to line in on boot up.
you need to check in control panel - sounds - audio to make sure the mike is selected, skype has an options panel as well to choose the input device.
The other possibility is that its using the wrong codec check in control panel, sounds, hardware, audio codecs, properties, something like windows media audio codec should be at the top, you can adjust by highlighting, selecting proporties and setting prioirity to 1, i have seen the priorities change before for no apparent reason.
Good luck
Rickity