Instructions
Connect the headset to the bottom of your Xbox 360 controller (where the audio/accessory jack is), and move the switch at the base of the microphone to the microphone icon. This will ensure the headset is not muted.
Put the headset over your head. The earphone should be touching the outside of your ear, and the plastic tab on the other side should be just above your ear.
Position the boom mic two to three inches from your mouth. This is close enough that normal speech will be picked up without outside interference.
Speak at a normal "inside" vocal volume. There is no need to yell into the Xbox 360 microphone, as it is designed to pick up regular voice signals at a reasonable distance.