Do you by any chance have
alsaconf available on your system (probably in
/usr/sbin)?
If so, actually log in as root and execute
(It examines your hardware and writes the configuration files for you.)
Then, still logged in as root, execute
and set your levels and all that; then try playing an MP3 file with, say,
mplayer. Make sure that "OO" appears at the bottom of the sliders (the space bar switches between "MM" and "OO").
If that works, still logged in as root, simply execute
to save the settings.
Exit, log in as somebody else and try playing an MP3 file with, say,
mplayer (you may need to reboot but that's unlikely).
If you're using KDE, make sure the volume control (it's on the panel) is muted and that the level is roughly half or better (don't know where any of that is in GNOME).
I have the same hardware you do -- the above works just fine.
Hope this helps some.