There are some VI that require a valid input be selected for the audio input, but from what I understand from Digidesign, this is an indication that the plugin is not 7.x compatible.
Also, from the getting started guide:
Quote:
Engage the Mic selector only if you have an
XLR cable plugged in to the mic connector.
Leaving the switch engaged with nothing
connected may introduce low-level noise.
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So if it's necessary to select an input for a plugin that you are using, make sure that the mic selector is set to line, or that you select one of the inputs that does not have a mic pre.