Yes, do uninstall audacity.
Then go to start menu and click on run. Type in services.msc and click OK. Scrool down to near the bottom and see if Windows Audio is started under status.
Now lets set your windows sounds to default.
Open Control Panel and double-click on the "Sounds and Audio Devices" icon.
Under the "Sounds" tab, select "Windows default" in the Sounds Scheme drop down menu.
Under the "Audio" tab, make sure that Your Sound Device is listed in the top two sections...if not, select it from the drop down menu.
Under the "Voice" tab, make sure the Your Sound Device is listed in both boxes...if not, select it.
Under the "Volume" tab, put a tick in the box to "Place volume icon in the taskbar".
Click "Apply" and then "Ok".
Now look down by the clock...is there a little speaker there? If yes, double-click on it and make sure there is not a tick in the box next to "Mute" and that the Volume sliders are all set to at least halfway.
See if your sounds are now working again.
P.S. I have called in wannabe1 from the staff to help with this problem.