A:AnswerThe sound balancing feature only works if you use the optical cable -that is NOT included. The "dongle" with the USB cord that you plug into your PC also has an optical audio port. The mixer game/chat audio dial on the headphones blends these two sources. Many people will only use the USB connection so there is nothing to blend. You would leave the dial all the way to one side to hear the one audio source.
A:AnswerJust fixed this myself by muting my headset mic on the bottom left cup. I use a separate microphone so this is no worry for me.
If you need to use the headset mic I suggest giving the aux port a good clean and/or not using the headset mix.
Hyper X Solocast is a pretty cheap reliable mic.