I know you said you checked "just about" everything.. :)

Just wondering, did you check your playback and recording device selection?  If you 
go into control panel -> sound then click the 'audio' and 'voice' tab you can choose 
your playback and recording devices.. I ran into a problem like this a while back 
that had me stumped for a little while.  The guy could play sound but didn't hear 
anything on streaming video, etc.  What had happened was that some of these options 
were switched to the modem's playback and record devices.  Several modems install 
additional devices, and if these are selected as defaults in those menus it will 
screw up your sound.. Make sure that the sound cards audio devices are selected, 
not any other device.

Just a thought.

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