Do you have a software option for turning down mic sensitivity? Windows might have a sneaky little setting hidden somewhere in the control panels which overrides your Phoebus driver with "hear yourself talk" enabled by default.
In Windows 7 - right-click on the Sound Icon in the Systray/Notification area, select Recording Devices, select Headset Microphone or External Microphone (or whatever you got), then Properties, then the Listen Tab, the "Listen to this device" (hear your own voice) option was enabled by default (overriding my audio drivers) on my system, perhaps also on yours. There are also many other little settings behind that icon which might help.
Or there might be a hardware issue. As in, are your audio cables all bundled up together and causing some sort of inductive signal crosstalk?
If all else fails, you could try installing a foamy noise-canceller onto the mic, it might at least partially reduce input noise.
Good luck.
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