Strange - the MB/P's have a function that lets you have two separate volumes for headphones and speakers. Handy, because if the headphone jack came out by accident then you wouldn't have whatever your watching blaring out the speakers.
The reason for the headphone socket glowing is because the MB/P's offer optical out audio as well as your standard analogue connection. When using optical out, you cannot control the output volume using the MB/P keyboard shortcuts.
Your speakers are probably muted because your MB thinks you are using optical out (hence why there is red light coming out of the socket). Try going to System Preferences and clicking on the Sound tab, then Output.
See if you are able to select Internal Speakers and also check if there is anything else listed there - right now I have nothing connected to my headphone jack and I am only given one option, Internal Speakers. When I plug in my optical connection, it changes and gives me only 1 option and that's Digital Out.
Are you getting the same results, with digital out being the audio out device after you removed headphones? Strange if it does do that - if I plug in headphones to my MBP, sound device is changed to headphones, and if I plug the headphones it goes back to internal speakers. Does yours change to Digital Out?
