From the audio tab in the config app, if you play some music on your pc and then click the Test button, do you see any audio activity on the display? Do you see any buttons lighting up?
Or are you having problems when running LEDBlinky from LaunchBox? If that's the case, then I'll need you to turn on the Debug Log option (Misc options tab), run LB and a few games, then email me the debug.zip or debug.log file.