I just recently purchased a Microsofts webcam (v?5000). Whenever I live-chat with someone, all of my statements echo back through my speakers. How do I correct this?

Check the options of the program you are using to chat with will allow you to select the audio record device.

This sometimes can be set to record "What-U-Hear", "Mic", etc... I would see if you can find this option and play with those settings.