My macbook can detect my line in, but no input is given. The bar below does not move. What has happened?

For more information, my macbook 2009 is running lion. I have tested the mic on another pc, to confirm that the mic works. I have tested my mic through skype on my mac. Here is a screenshot for more information.

Thanks for your suggestion.
I have tried several cables and also the other USB port, but this doesnt fix the problem.
I have my itunes on auto update and it is up to date so I assume that an update has occured
although I have been using the i touch without a problem until now
I was wondering if I follow your suggestion and reboot the itouch could it do any harm to the
info on the device now?  I wouldnt want to lose my photos and music etc.  also quite  lot
of important info on the Notes.  Will all this info stay in place?
Thanks so much.....

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