microphone not working

i have purchased dragon dictate software for my Mac OS X. i have also purchased Logitech ClearChat Style mic. i can hear through it but the microphone section does not work. i don't believe it is the Logitech product as from researching faults with Mac it appears that the internal/external mic is wanting.

does anybody have any advice how i can get around this? i have gone to System Preferences and i am pretty sure that all the correct things are turned on.