Could you try one simple approach
Start->Run->
Devmgmt.msc
Click on the + sign on your Sound\Audio heading
Right click on your realtek ac 97 device and select disable
Then right click on the same device and select enable
Then check sound again ie Start->Run->C:\WINDOWS\Media\tada.wav
Failing that, go back to Device Manager (Start->Run->
Devmgmt.msc)
Click on the + sign on your Sound\Audio heading
Right click on each device, and select remove (or un-install)
When you have removed all the devices (that you can) under Audio
Run the Live Update again
Please let us know if it worked