I've been experimenting on my ME machine and was finally able to duplicate the problem AND fix it...
Let's hope this works for you, too.
Make sure you have a copy of the system.ini tucked safely away in your "My Documents" folder. Then open the system.ini file in the search results window by double clicking on it. Delete the line in red below and then press "Delete" again to remove the space it leaves between lines of text. Close the window, choosing "Yes" to save the change.
Reboot...you will still have no sound...
Search for system.ini again and double click on the file in the search results window. At the bottom of the [Boot] section, add the line drivers=mmsystem.dll
and press "Enter" to add a space between the [Boot] section and the section under it. Close the window, again accepting the change.
Reboot...do you have sound?