If this is a 1004 install, I have been breaking audio for a few weeks for certain chipsets. If you upgraded during this process, I am probably to blame. I have just submitted code which should fix everything for everyone, IF indeed I am the cause of your particular issue.
I have also fixed ac3 passthrough/surround sound for everything as well.
So, again, if this is 1004, have a little patience... a new set of packages is being built today... then just upgrade when they are ready. http://wiki.linuxmce.org/index.php/LinuxMCE-1004_beta