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What kinda of sound card do you have? Also, if you have a mic... you might want to check the sound settings on your computer to see if the sound is being recorded from "Analog Mix" which includeds Line-In and Microphone" this would cause the echoing because the sound it getting captured through the microphone after it has been captured by the Line-In.
Also, you might want to check and see if its being recorded from "what you hear" because this would have virtually the same effect, except that there is a delay in when the sound goes into your computer (line-in) and when it comes out (speakers) and this would also cause the echo.
Both of these situtation could have the loudness effect you spoke of as well because its receiving large amounts of audio input from many different saources and doesnt know what to do with all of them... causing the loud noise
hope this helped some
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