Playing Halo3 on Xbox 360 Live... can hear other players on headset but mic doesn't seem to work. Turning mute button on wired headset on and off makes no difference. I do have a little circle with line through it down in the bottom right corner of the screen which I assume means the game thinks I have muted. Any ideas how to get unmuted or do I just have a bad headset?

can you send a normal message?

This is a problem with the connection port or wire connecting the mic. You need to get the mic replaced.

Are you muted? Check to make sure the mute button is not turned on. Also, check that the wire is firmly connected, as you might get, but not send sound. Check your settings in the dashboard as well in console settings, as it might be muted through there.

xbox guide last slide-preferences-voice-play throgh speaker headset of both

Theres is a loose wire in your headset most likely. Try plugging it into another controller just to be sure its not the controller. If there is a loose wire there is not much you can do other than buy a new headset.

Most likely, it isn't the wired headset that is the problem. It may be the controller. If you haven't already, try testing the headset with another controller.
Since hearing and voice are two separate functions, it may be that the controller is only able to send out sound, but not able to pick it up. Test it out with another controller, and hopefully it will work.
But may I suggest a common issue that is overlooked:
Double check the microphone is not muted. (both in the settings of your Xbox 360 AND the mute option found on the wired headset. It's by the volume.) To check this on your Xbox 360 click on the "home" button (top middle part of the controller with the Xbox logo) go to settings ---> preferences. There you will see the option to mute the microphone.
I sincerely hope Microsoft already suggested all of these things though.
Also, better double check that the Microphone isn't muted in Preferences BEFORE trying another controller because if it is muted in Preferences, (which can only be done when signed into a profile) whichever controller he uses, it will be muted to do preferences being set to any controller/headset used. So please double check that it's not the microphone that is muted to start, and then double check the headset isn't muted (on the actual headset) followed by changing controller if it still isn't working.
Hope this was of some help.

suspect that your microphone on your headset may be defective. try testing this headset on some other device such as a pc. to see if it works there.
also ensure your 360 game or online is not set to mute this will block your mic if you need to kuss in private.

check there is no mic on off switch on the headset. if so set to on.

un mute it or your audio receiver might be bad cheaper to buy a new one then to reapir the one you have

The only people who are allowed to talk on xbox live (in most games including halo) is someone who has an xbox live account. Guests can't use microphones.

However I believe if you recover a gamertag, and two players who both have xbox live accounts are playing on xbox live (on the same xbox), they can both use microphones. But whenever you see for instance Gskellig(1) on halo, they won't be able to use a mic.

Try sending yourself a message and see if you hit play (after recording the message) you can hear yourself. Sometimes Ive been playing games like GRAW2 online and when I lose connection with the host or something along those lines my mic will stop working untill I reset the console. Also, most games will have some kind of an indicator when you are on Live that show when someone is talking. Do these indicators activate at all? (usually a small volume symbol that will light up next to the persons gamertag)