Well, after agonizing and stamping my feet, I finally got it all sorted out. It appears that the the SP1 update resets everything to a 'flat' state, so you have to go into the Realtek control panel and mess around with the Sound Manager and in particular the Analogue panel on the right - there is a YELLOW FOLDER which you click and then ensure both connector settings are checked (It failed to work when one or other of the boxes were unchecked). I then also clicked on the advance settings link at the very top of the analogue panel and checked the option 'Mute rear output device when front headphone plugged in' (I haven't tried it with the other option checked). Then I restarted the pc and - voila! sound came back. I updated the Realtek drivers to the most up to date one, went through all the motions as mentioned above and - voila! Sound is back again. TBH you will likely always have to go through the motions of resetting everything when you have a Realtek Driver update.
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As an additional but possibly important note, for anyone with Vista and a Realtek Soundcard who can't 'RECORD WHAT YOU HEAR' - which is standard facility for XP and most other soundcards - I have found an excellent toolbar that bridges the gap and does it all and more besides (without putting added crap on your pc) and best of all it's free, see here: http://www.freecorder.com/freecorder3/index.php?src=uk.search.yahoo.com It can be installed on IE and Firefox and has many other options at your disposal, you will however have to re-install the toolbar should Firefox have an update. I have spent countless frustrating hours talking to the techies at Novatech about the inability to 'Record What You Hear' on my own Vista pc with a Realtek Soundcard connected, and they say the fault lies with the crappy soundcard that does not have the ability to record sound (like streaming radio for example). The solution is to either upgrade the soundcard (which is a must in the near future) or find the missing link - which the Freecorder toolbar provides. A lot of the free desktop recording programmes do not work as they do not have the missing component.
I hope that helps anyone else with the same problem.