Here's another angle from a net search I did:
"Have you verified that the service is running? I had a very similar problem a year ago and even went so far as to get a new sound card; nothing worked. Turns out that the service just wasn't running.
Try this: Go to start > run. Type in services.msc and hit OK.
When the box pops up, scroll down and look for Windows Audio (or similar). Double click it. Make sure that the startup type is Automatic, change it to that if it isn't. Then click Start."