It's been a while since I've run Mint 12. Isn't it using Gnome Shell instead of Cinnamon?. If you could take a screenshot of your relevant sound applet window, maybe I could help you more. I don't currently have any computers running Mint 12, or any install media for it.
I think you might have to move the volume slider so it's not at the minimum position. It usually mutes the mic as startup.
Do Audacity and other programs see the mic, or does it not even show up? Since it says something about it in the sound panel applet, that leads me to believe that it's being detected. Try unmuting the mic.
Running on a 4-slot toaster @ 60Hz