When in Hal clidk on the upper left button called menu. Then click on general options, then speach, then on the bottom half of the screen there will be a little box that enables speach recognition.
It takes several hours of trainging to get Hal to understand you with out to many errors. IMPORTANT Make sure that there are no other background noises going on that can be heard as they will impeed you teaching. Hal does not come with the software it uses Microsofts which is normally built into every version of windows, at least every version that I have had since Win 95 had it included.
As for you microphone I can not help you other than to recommend buying a regular mic that does not use the USB connection, however if you look into some options of windows you will see a microphone icon, turn it on and see if yours works now.
Bill