EDIT: Concerning the "pause audio" statement... I'd definitely ask this question over at MagicEngine (the forums are back up!). Kaminari or someone else who's savvy with the .ini file might provide the fastest answer.
That said, it's good to do what Seldane suggested, if only to eliminate possible causes...
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Following up on Seldane's suggestion: Definitely test a regular audio cd. You're on a PC sunteam_, right? Go into the "sound mixer menu" (double-click on the picture of the speaker in lower-right base menu bar). You can see all the volumes for individual devices, in addition to the master volume and "mute" settings ...
I haven't been on a PC for a few weeks, but I'm sure I'm recalling things properly...
Are you getting PSG sounds (i.e. sound effects?) in any games? Try Neo Nectaris (if you have it) and go to the "Input Password" screen: A PSG tune plays here, unlike the rest of the game's Red Book. Well, actually, the "Game Over" sequence also has a PSG tune, but that's not easilly accessed for trouble shooting.