I had this problem as well..I couldn't get any sound from this Mobo when I use the "Headphone" setting in the sound manager.
I followed the manual by plugging my headphone into the lime connector and left all others unconnected..Sadly, the sound manager can detect the bottom three connectors correctly, but it indicated my top connectors were all, except the centre black one, connected as well, while in fact, nothing were plugged into them.
To get around this problem, I have to set the AC97 to 8 channel mode and plug the headphone into "any" connector in the top row..This is just so strange, why do I have to use 8 channel mode while I'm only using headphone!!!!
I wonder if it's the MB's problem or the AC97...I kinda losing faith on Asus....
There is an internal audio connection on the motherboard for connecting to the front panel audio connectors of your case that properly supports the headphone/microphone ports. My suggestion next time before you blame the manufacturer would be to fully research the hardware and purchase accordingly.