Had a not disimilar problem on the Mrs's beast about a month ago. She could get no sound in PalTalk, which she uses every day to talke to the kids (36 and 40 year old KIDS???)
I changed the sound card, reinstalled the card drivers, and was just wondering where to go from here.
As a last resort we looked at a system restore, and lo and behold, one of the entries on there was Windows Media Player update.
I had heard some people talking about the odities of the latest version of Media Player, and after a sys restore the new one was gone, the old one was back, and sound was restored.
Personaly I have Nero Player set to default all media here, and also have Auto Updates turned off, so I don't get nasty Micro$oft $hock$ from Redmond...