Here's what I've tried so far to fix this: 1. I saw on the boards that someone said that all they had to do was uncheck "Mute" in the Audio MIDI Setup. All Mutes were unchecked. No go there. 2. Restted my SMC...that's didn't work at all. 3. What seems to work is resetting PRAM/NVRAM...that is until the iMac goes to Sleep Mode. Once out, it goes back to what you see in the pic below. Restting PRAM/NVRAM all the time can't be good for the iMac...right? 4. And no there is no red light coming from any of the audio connectors in the back. What's off the table: Reinstalling Lion 10.7.4. I can't, no way, don't want to. Is there any other way to fix this? Any help would be greatly appreciated.