No playback from microphone

Hey guys,

I just set-up Cubase AI 7 on my laptop and I’m having trouble with playback when micing my guitar. I really have no idea what the problem is as I’ve checked all the obvious stuff but I’m a Cubase newbie so maybe I’m missing something.

Here’s my set-up:
MBox 2 mini with headphones, Windows 8, Cubase AI 7

My problem is that everything works fine as far as virtual instruments are concerned. I can record them and play them back no problem. When I try to record my guitar, I can hear it through direct monitoring and it actually records the audio because I can see the waveform, but nothing happens when I try to play it back. I just hear the click track.

Direct monitoring and record-enable are both off, the levels in the mixer are fine and the outputs are routed to the Mbox.

Does anyone know what else this could be? I’d really appreciate any help on this.