This is amazing.  Kenster, thanks so much for this post!  I can only imagine how many people have benefited from your research but haven't posted replies.

One note: I found that I needed to edit both versions of the ADIHdAud.inf file -- in the driver pack I downloaded from HP, there was one copy in "i386" and another in "amd64" -- for the fix to work.

I have no doubt that the audio record functions are disabled as a result of recording industry interference.  Pretty amazing to me that they would disable fairly basic computer functionality just to prevent consumers from recording audio, but apparently that's what has happened.  Wow.