One of the tricky things in Second Life is to get voice mode working. Here's a little mini-tutorial that (I hope!) will help.

Let me suggest right at the start that you use a headset rather than an external speaker/microphone set. You'll get much better results, and much less echo. I have also found that Vista seems to work better with a USB mic/headset than with a jacked mic/headset.

Step 1

From the Edit menu, select Preferences:

Step 2

Select the Voice Chat tab:

Step 3

Check Enable voice chat:

Step 4

Check Use push-to-Talk in toggle mode:

Step 5

Click the Device Settings button:

Step 6

Pick your Audio Devices from the drop-down lists:
this may take you a few tries, depending on how many audio devices are connected to your system

Step 7

Talk and adjust the volume until you can be heard, but not too loudly:
this may take you a few seconds, depending on how sensitive your equipment is
If you have a problem with this step, you may have a driver issue - check to see that you have the latest drivers for your sound card, and that they are the correct drivers for your operating system

Step 8

Once your voice is as loud as you like it, close that window, and select the Voice Chat Setup button:

Step 9

Make sure Yes, continue using Voice Chat. is checked:

Step 10

Click the Finish button on the Voice Setup window:

Step 11

Click Okay, and you're done: