(0) Shut dowm mini. Then restart and see if that fixes the problem.
(1) Check your mini's > System Preferences... > Sound > Input setting to be sure iSight (or other if desired) mic is selected as your "Input device". Also verify that the "Input volume" slider is positioned so at least half of the "Input level" indicator lights flicker while you talk.
If you cannot get this to work with iSight's mic, the iSight, its cable, or its connection may be faulty. You can test your external iSight using the suggestions in this link , including Apple's troubleshooting suggestions from http://support.apple.com/kb/HT2090
Be sure to verify that iSight's mic works to record with Apple apps like Photo Booth and QuickTime Player. If not, verify the symptoms are EXACTLY the same in more than one user account. Don't use the "" account for this test. If your Mac only has one account, create a new user account for testing. (A "Standard" account is all you need for testing.)
(2) If audio works with Apple apps and the trouble is ONLY with Skype, verify that you are using the latest Skype compatible with your system.
If that does not fix your problem, search Skype Support for suggestions like these:
I restarted the Mini. Several times. Even checked for software updates. That did not fix the problem.
I checked Apple > system prefs etc. The ISight is the selected source, and the lights flicker.
I am using the latest version of Skype.
I do not have photo booth but do have Quicktime and IMovie. it will not work for either of those. It causes both programs to freeze up.
I followed the link you posted at the bottom of your thread. There are no flickering lights under the microphone setting, and, when I made a Skype test call, it would not record sound.
(1) Photo Booth is part of Mac OS X (10.7.x) Lion. Because your mini does not have Photo Booth, and because your external iSight's mic works with your mini's > but NOT with any application software in any User Account, I conclude that your Mac OS X software haas been modified or damaged.
(2) Properly applying the latest Combo Update for your OS X version may correct the problem. Here's how I apply the combo update:
• Unless you already have one, make a current backup NOW.
• Use your Mac's Disk Utility to repair permissions and then