The expansion port support is bugged in the 1120 build at the moment for the new controllers. If your controller has the integrated headset jack then anything that uses the expansion port may not work such as the stereo adapter, chat adapter, stock headset. The integrated 3.5mm port should work. There are also reports that starting the XIM4 with the stereo adapter already attached and the headset hooked up may sometimes work using 1120 and the new controller.
We are expecting to have this fixed in a new build later this month.