Have you reinstalled the audio drivers? you didn't mention it and it would be the first thing to try. You could first check in the Control Panel\Sound and Audio Devices\Volume tab\if the Device Volme slider is grayed out; = Go to the Device Manager; My Computer\right click\Manage\Device Manager\Sound, Video and Game Controllers\right click on the Sound Card\click uninstall and restart the Computer...
As Windows XP restarts the Sound Card will be automatically reinstalled by the Plug and Play Service... after logon, go to the Control Panel and check the volume slider or test the audio output. If it hasn't been installed (slider grayed out) the appropriate driver may not be available... If the slider is accessible but there is still no normal audio, the driver may be corrupt and would need to be reinstalled fresh from a downloaded update. To download an update, go to the Sound Card manufacturer website, search for a driver update, download and install it, and try the audio output.
If there is still no audio, go to the Device Manager and this time try installing the driver manually. If nothing worked up to this point, the sound card or the speakers could be damaged or the connection could be incorrect... it may be the speakers are connected to the wrong port... the green port is audio out... some sound cards have the surround black port which may also work with twin speakers but audio may fail at some point, so check if you have this type of sound card and that you're not using the black port with stereo twin speakers.
Once you've solved the audio volume problem the audio icon should return to the notification area, if it doesn't you may want to substitute it (even if it's back) with an application.. I use one named Volumouse that uses the mouse to raise or lower volume with alt+mouse wheel... it's light on system resources, safe and doesn't carry spyware.