I noticed something weird today after I had the battery die on me and my laptop was abruptly shut down (another issue I'm dealing with). As the system was coming back up, the line input was open and the XM volume was very loud and clear. As I was being logged into windows (I dont use a password for my carputer) the volume went from loud to the low volume that I'm used to being stuck with. After messing around with the microphone test, I discovered when the test opens the "microphone" input to do the testing, the volume is loud, almost too loud. As soon as the test is complete however, it again goes back to being low.
I now know that the problem is entirely software related, since I've already seen all the hardware perform as intended (during boot). I have downloaded and installed the latest realtek drivers and disabled all equalizers to make sure they weren't messing with the signal.
My only ideas I can think of in this point is either a registry setting that limits the playback volume. Another possibility is that the driver for the XM controller is telling it to turn down it's ouput level (I don't know if thats controllable or not).
I was about to buy a new USB sound card, which would require some major replanning to get enough ports by the laptop (I hate USB hubs). After seeing this work, I am convinced that new hardware isn't needed.