You must have changed the interface input in GarageBand

To set an audio interface as the audio input device:

1. Choose GarageBand > Preferences, then click Audio/MIDI.
2. In the Audio/MIDI pane, choose the audio interface from the Audio Input pop-up
menu.

If you connect a microphone, an instrument, or other audio device directly to your
computer’s audio input port, you set may need to configure input settings for it in the
Sound pane of System Preferences.

did this help?

I have found that sometimes external interfaces don't "play nice" with the Mac's power management. If you haven't already, un-plug and re-plug the IO2 from the USB port, then re-assign the track inputs in GB. If that doesn't fix it, try a reboot of the Mac. Also, those are condenser mics, no? Is phantom power on?

audiokid: I tried all that to no avail. Everything worked just fine before and no matter how I set the inputs the signal never reaches Garageband.

Vttom: Thanx for the insight. I did unplug the USB but then the inputs reassign to the internal mic. What's odd is that the same USB cable that clearly gives power to the iO2 simpy doesn't transfer the signal. This means that I know the cable works AND the iO2 works as well. BTW would I have to reboot the Mac or is there a way to just uninstall and reinstall Garageband? Yes, phantom power is on.

needlewithaprune, post: 379849 wrote: BTW would I have to reboot the Mac or is there a way to just uninstall and reinstall Garageband?

I've made it a habit or re-booting my iMac before starting an intensive GB session. The reason being that I can go weeks (or months) at a time between uses of GB, and the iMac otherwise never gets rebooted in-between (unlike my PC, which reboots at least weekly after taking automatic updates from Microsoft). It all seems to work more reliably for me right after a reboot.

I've had my iMac for 4 years and have never intentionally rebooted it. I will give that a shot. What exactly does rebooting it mean? Also, I took my gear to my girlfriend's place to use her laptop which has GB on it as well. The same problem happens on her system too. The iO2 receives the signal but does not transfer it to GB. I tested her built-in mic and it records fine (despite sounding like crap). I'm leaning towards the problem residing in either the iO2 or the USB cable at this point. Man this is frustrating.

When you say your girlfriend's built in mic recorded fine, are you sure you are actually selecting the IO2 as the recording device? In Core Audio you may need to actually "activate" the input channels you want to use. Just because they are on the IO2 won't necessarily mean that they are active in Core Audio.