Having a CD play doesn't necessarily mean your sound drivers are working - AFAIK, most CD-ROM drives have a cable that connects them directly to the sound card in order to play cd audio without the need for software intervention.
So unfortunately, it probably is a problem with ALSA and/or arts.
I'm in the same boat - having trouble getting sound up and running.
Do you get any error messages at any point? If not, it must be either a muted or 0 volumed channel... or else everything's REALLY messed.
Post any errors you get, as well as the output of lsmod.
trying alsaconf couldn't hurt, either.