No sound output when using microphone on MacBook Pro

I'm using a MacBook Pro with OS X 10.6.8. I have attempted to fix this problem by repairing permissions and by resetting PRAM - neither helped.

The problem is that when using System Preferences to set input to Internal Mic and output as Speakers/Headphones I don't get any audio output from the microphone. I can see the audio level responding when I select the Microphone as input - but there is no microphone audio coming through to the speakers or headphones. I do get an audio beem when I change volume level, and the speakers work when playing music from iTunes and other applications.

I was able to get audio out from the microphone under one circumstance - when using Audio Hijack Pro to use Mic input and with Headphone output selected.

I have tried all sorts of things to get the audio out working with Mic input, but so far nothing has seemed to work.

I'd appreciate suggestions for what the problem might be and how to fix it.

Thanks.