If the recording device is "greyed-out", you may have a hardware conflict or device driver problem. A hardware conflict means that two computer devices are trying to use the same computer resources (interrupt, memory, Direct Memory Access channel, or Input/Output Address). A device Driver is the program that interfaces the sound card (or other device) to the computer.
Close the Multimedia Device Properties window and open "System" in the Control Panel. Select the Device Manager Tab and look for any Yellow Exclamation Marks or Red X's. A red X means the device is disabled, a yellow exclamation mark means that there is a hardware conflict. If you have a conflict or disabled device, post some more information about your computer (sound card type, what devices show up with conflicts or as disabled, what devices show up in the Control Panel-System under Sound, Video and Game Controllers) and I will try and help you troubleshoot.
If you have no conflicts, you may need to reinstall your sound card driver. If this is the case, let me know and I'll try to help you reinstall the driver.