Microsoft LifeChat LX-3000 and Skype

I just bought a Microsoft LifeChat LX-3000 headset to use with mainly with Skype to talk with my friends and family. But as soon as I began using them, after 10-30 seconds while on a call, the mute light would come up on the device and I couldn't remove it. By ending the call and restarting it I could again talk 10-30 seconds.

I found out the problem was that Skype was automatically adjusting the volume and it kept lowering it to zero for the audio in.

Tools -> Options -> General -> Audio Settings
UNCHECK "Let Skype adjust my audio setttings"

And that fixed my problem.