I've been recording a few collab playthroughs. One being Spiderman: Shattered Dimensions for PS3 and the other Sonic Boom: Rise of Lyric co-op which is a whole new experience from single player. Sucks about update though, ruins a bit of the wonder the game has.
If I'm reading your dilemma clearly it seems like you are trying to record the game and your voice in the same program which I wouldn't recommend. I don't use an Elgato personally since I own an HDPVR but I would suggest using Audacity, a free program used for recording voice from mics like yours, to record your commentary separately and the elgato to only record the game, that's what I do at least. It's easier in editing to have two different files for your commentary audio and your game video/audio to make sure that one doesn't over power the other.