I have hooked a HDMI cable from my 360 to a hd lcd tv and the picture is great b

audio is controlled through the hdmi cabe, so either there is a problem with one of your components, or something is muted/volume down. look in the audio settings on the xbox to make sure it is set to hdmi audio out.
on original xbox 360 (the white ones) you cannot plug in both the hdmi cable and av cable, as the av plug is too big (im not sure if this is so on newer ones). you can remove the shroud around the av cable and use the red and white out. alot of people do this (me) so that you can have the red and white to plug into gaming headsets while also having hd graphics.