Thanks again for the suggestions, I tried all the different players possible in that section and thats how i got the external programs to load for the sounds, which was inconvenient.
But FINALLY I have got my problem solved so I figured I would post up the solution in case someone else encounters the same problem.
After searching google for most of hte day I came across a similar thread from another board<sorry forgot to copy the link for reference>.
I am not sure why it works, but it does for my problem, I am assuming that is is some kind of lock file for the sounds?
Code:
# mv ~/.kde/share/config/knotifyrc ~/.kde/share/config/knotifyrc.bak
And then restart X and everything was back to normal.
Give it a shot if you have a similar problem.