If I add a second controller when playing COD:BlackOps online anybody who talks has a bad echo. Its almost like we are receiving two different audio streams even though we're using the same output. And when I turn off the 2nd controller the echo stops. Anybody know how to fix this?
You guessed correctly, you are receiving two audio signals. Lets step back and think of how split screen sound works. Assume you and I are playing split screen. If someone shoots at me, I have to hear it (even though your character may not be in range to hear the gun shots). So essentially two audio feeds are being fed through the speakers.
Now what your discussing is clearly a bug (I have a feeling this won't be the last one thats found on an obviously incomplete game). Both yourself and your friend are essentially receiving a unique audio feed of the in-game chat. In order to prevent this from happening you must mute your friend and he must mute you. Here is a ps3 forum post describing the problem and solution. If this doesn't work try plugging a mic into one of the controllers and sending audio chat to the mic (not the speakers) or actively mute all players who join the game. It looks like a patch may be coming for the issue.
Hope this helps