Kinect microphone turning off when second player signs in

My boyfriend and I are playing COD online with two other friends. When he is using the Kinect's microphone to chat, and I turn on a second controller and sign in, the Kinect's microphone gets turned off.

However, if go into Chat & IM, it says the mic is on.

What is going on?

We can hear our friends but they cannot hear us. Also, there is a red X over the little mic symbol next to our names.

I had this issue and it turns out that my second controller constantly thought it had a headset plugged in. Thus, giving you the mic icon in the chat window, disabling your kinect for chat and no speech coming out of speakers. Try using your second controller as the first player and see if the kinect chat feature works.

If the second player is a silver account, the online chat feature will turn off as that account seems to take precedence when playing online. If you want to chat while playing with a silver account player, you will have to use a headset.

This was a suggested answer off of the Xbox forums to a perhaps identical problem.

Source: http://forums.xbox.com/xbox_forums/xbox_support/f/11/t/118362.aspx

Outside of that, the Microsoft help suggests the following generic checks, though this likely has nothing to do with having the second player connected:

From the Xbox 360 Guide

1. On your console, sign into Xbox LIVE.
2. On your controller, press the Guide button.
3. Select Chat & IM.
4. Select Kinect Microphone to turn the microphone on or off.

Source: http://support.xbox.com/en-US/games/xbox-games/kinect-games

For more basic Xbox LIVE Chat troubleshooting, check here: http://support.xbox.com/en-US/xbox-live/connecting/parties-voice-chat