Same problem here.
Computer model:
HP Pavillion desktop model 500-214
Windows 8.1
IDT High Definition Audio CODEC
The identical issue exists on my HP Pavillion G Series laptop with Windows 7 and IDT HD Audio CODEC.
There are mic and line inputs, but you can't hear them. Nothing in the Playback/Recording/Levels tabs changes this. If you are using Skype, your microphone is unheard. If you want to voice chat, sing karaoke, or record guitar, voice or keyboard over a backing track, this is impossible without hearing direct input audio. Windows 95 through XP did not exhibit this issue. Everything from Vista to 8.1 has.
The only way to hear is to click "Listen to this device." This gives you the post-processor sound, which is delayed, and causes a horrendous echo. You cannot time yourself to music or even carry on a basic conversation with a constant echo.
Windows 7/8/8.1 users with Realtek audio chips have found registry hacks that bring back the independent Line In/Mic In audio mute and volume slider sets and solve the problem, or are lucky that the Realtek software gets them around the glitch. Unfortunately many of us are stuck with IDT which offers no such hope.
It is theorized that the Line In/Mic In audio controls still exist in Windows 7/8/8.1 as they did in Windows 95-XP, but have been removed from the registry by HP, Dell and other PC makers for some reason.
Installed software: There is no software that impacts the fundamental ability to plug a mic into the computer and hear yourself. I have, however, spent $193 on additional sound cards and interfaces trying to get this basic function back.
I hope someone with Hewlett-Packard sees this and responds.