I'm having some trouble with my Dell Inspiron 1420 with Windows XP 32 Home SP2 and Ubuntu 8.04 32 installed on it.
I went to a LAN party on the weekend and took my laptop as well as my Zalman 5.1ch headphones which I plugged into the front of the laptop and set up to use surround sound which worked fine all LAN.
After the LAN when I got home I booted into Ubuntu to do all my usual net stuff and noticed the sound wasn't working. First thought was god damnit **** linux has broken itself so I tinkered with some different solutions but with no luck, I ended up re-installing 8.04 (had a fresh install and backups anyway). When I finally got it installed again it still had no sound!!!
So I booted into XP again to see if it wasn't just a problem with my Ubuntu install and strangely enough it wasn't. No sound in XP either. Checked sound menu and nothing was muted, volume was right up. The speaker setup was still on 5.1 so I changed that back and still no luck.
I tried a reinstalling the driver with no luck.
I tried installing a different driver with no luck.
With the reinstalled drivers Windows would still go to the Stereo Headphones setting instead of laptop speakers and the box for Use S/PDIF Output would always be ticked. When I changed these to the correct settings I still had no luck.
Sounds like your speakers have gotten fried somehow. If you've checked to make sure that the speakers alone are not muted in Windows XP, then I'd seriously be looking at the speakers being fried and needing replaced.
If the headphones you were using still have sound.... then it is DEFINITELY a problem with the speakers being damaged or broken.