When I turn on and off the computer I hear the system sounds. But other than that I'm not hearing anything .. I went to sound setup and have the right settings checked, and when I talk into the microphone I "see" it being registered ... Help!!!
Which version of Mac OS X are you running? I had this odd issue once. Solved it by deleting 2 audio-related property list files in the root Library (at the root of the drive) then rebooting. Alas, I do not remember their names and cannot check as I am not at a Mac.