I wouldn't say that I have a solution just yet, although I do believe we are making some progress

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Ok, rebooted and same problem as before. Running "speaker-test -Dplug:front -c2 -l5 -twav" gives "device or resource busy" error as before.
I tried "lsof /dev/dsp* /dev/audio* /dev/mixer* /dev/snd/*" while it was going and got:
Code:
user1@opensuse-laptop:~> lsof /dev/dsp* /dev/audio* /dev/mixer* /dev/snd/*
lsof: WARNING: can't stat() fuse.gvfs-fuse-daemon file system /var/lib/gdm/.gvfs
Output information may be incomplete.
COMMAND PID USER FD TYPE DEVICE SIZE/OFF NODE NAME
pulseaudi 3599 user1 29u CHR 116,9 0t0 4301 /dev/snd/controlC0
pulseaudi 3599 user1 36u CHR 116,9 0t0 4301 /dev/snd/controlC0
skype 3769 user1 mem CHR 116,5 4277 /dev/snd/pcmC0D0p
skype 3769 user1 32u CHR 116,5 0t0 4277 /dev/snd/pcmC0D0p
mixer_app 3834 user1 22u CHR 116,9 0t0 4301 /dev/snd/controlC0
It looks like skype may be the culprit! I quit skype and ran your speaker test at cl again and this time it worked. Opened a file in VLC again and sound was working there as well.
Ok, now we are getting somewhere. Sound is working in VLC using ALSA, but I still have a few problems:
1. Totem still has no sound. I don't know if this is skype related or a different problem. I've tried changing settings in gstreamer properties but get no sound regardless of if I set it to ALSA, OSS or pulseaudio.
2. Although its not essential, I
would still like to use skype. Don't know if there is a workaround to stop it from taking over?
3. Mplayer crashes if I set it to ALSA. If I set it to OSS it plays video, but says "could not open/initialise audio device" and I get no sound.
EDIT: If no other apps are using sound, mplayer works using OSS. Mplayer wasn't able to initialise the audio device as I had a test youtube video loading. Once I closed the browser it worked.
Anyway, looks like we are part way there. I can live without skype and VLC is working, so I can at least play video through that. Also flash player has sound again so youtube etc is usable again.
As for the other problems, I'm still not sure whats going on. ivom66: I tried /usr/sbin/alsa-init but this didn't seem to do much for totem or mplayer using alsa (I got no output from this at all on the command line, and same sound problems were still there after). I tried the more complex commands you suggested as well but same result.