You've probably solved this by now, but for those browsing for answers:
I lost sound suddenly (and incurred other monitor issues) for no reason I could see. Turned out I lost 2 lines out of my system.ini files somehow. Adding them under the [boot] section fixed the video and sound problems respectively (2nd one fixed):
display.drv=pnpdrvr.drv
drivers=mmsystem.dll
My symtoms:
1. Monitor would only come up in 16 color mode and would not change.
2. Sound was disabled, all drivers in place, no volume control, and no software could recognize there were speakers or mic.
My system is an AMD 1.0 Ghz, emachines with windows ME pre-loaded (so re-installing wasn't an option). No viruses, reloaded monitor, sound, and video adapter drivers several times (including updates from web to no avail)
This is a great forum, so keep postin answers!!! Best place to get up and running. I got the above fix on this page, and applying to my problems. Thanks all!