Well, after fooling around with it for awhile, it turns out it has to be software related to kinect audio and wired controllers. I re-ran the kinect audio tuning and the kinect can hear me perfectly fine during the tuning using the wired controller and no chatpad. The audio works normally with a wireless controller.
After some consideration of my possible options, I might just keep it that way. This way, I can quickly jump in and out of chat during black ops 2 matches. If I didn't have it that way, I'd find myself constantly having to (via the xbox button) go into the xbox menu and either go to SETTINGS --> PREFERENCES --> VOICE --> MUTE KINECT ------OR------ go to PARTY --> START A PARTY to leave in-game chat. To re-enter in-game chat, the process is repeated. If I leave it the way it is, I can quickly jump in and out of in-game chat simply by connecting or disconnecting the chatpad. I am beginning to prefer this fault because I can control my privacy at a moment's notice, which is important when you have 2 small children and you don't exactly want the hodge podge community of Call of Duty listening in. I know for sure I already hear enough kids on Black Ops 2.....
I'm still going to be looking into the cause of this error and how to fix it, though. It really might just be a bug overlooked by Microsoft, since I doubt many people have wired controllers anymore. Microsoft wired controllers are hard to find, 3rd party ones are not.
PS. Thanks Hidden Drugs for your input! I appreciate the time and effort!