Odd wireless 360 controller issue

I am having a consistent, and unusual issue with my wireless 360 controller.

What is happening is that when the controller turns off, all active applications and games lower their volumes about 50%. This is not reflected in the windows sound manager, nor anywhere else I can find. The only way to recover the lost volume is to restart the application. You can still turn the volume up, but 100% volume is equivalent to 50% normally.

I have updated my drivers, and of course rebooted the computer. This started only after a recent windows reinstall.

Running Windows 7 Ultimate x64

Any help would be much appreciated.
 
There's "communications" section in sound control panel, check that no device sets sound to 50% when there's microphone activity or something (can't remember the details as I'm not in 7). I guess you don't have the headset installed?
 
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