AFAIK, there is no .NET builtin function for manipulating microphone mute.
I'm not certain that there's a directx9 managed wrapper for mute / unmute of
mic either (since DirectSound hasn't been wrapped). You can use DirectX9
still, just not all through managed code.
You might want to look at the ng
microsoft.public.win32.programmer.directx.managed to see if there's anything
there. It's not a terribly active group (averages 3-4 new threads a day)
but it would be the place to go to see if it is possible with DirectX9 and
possibly how.
Here's some C++ code that does it without using directx 9. You should be
able to do something similar with P/Invoke. I'm not very familiar with MFC,
though, and when I looked at the code, decided it wasn't worth it for me.
Hopefully you can parse through it to find what you need:
http://www.codeproject.com/audio/admixer.asp