SOLUTION: Make sure the correct sound card is selected and enable sound.
Start -> Control Panel -> Sounds and Audio Devices
There are 5 tabs: Volume
, Sounds, Audio, Voice, Hardware. At this stage, the Volume tab was completely inaccessible, everything was darkened. This is because I had the wrong sound device selected!
Sound tab -> Make sure your working sound card is selected for the default device under Sound Playback and Sound Recording. (Find out what sound card you have: http://www.computerhope.com/issues/ch000503.htm
Audio tab -> Sound Playback:
Click Volume -> Properties -> Mixer Device = Your Sound Card (in my case SB Live! Wave device) and show the following volume controls for: Play Control, Wave, MIDI, CD Audio, Microphone (If you have one), & PC Speaker. (Make sure these are all checked.)
The first control will be Play Control, ensure that this MUTE ALL button is NOT checked. The rest of the controls should also be unchecked and the volume should be turned up to maximum.
Close the control center, go back to Sounds and Audio Devices and click the Volume tab. The options on this tab should now be enabled after selecting the correct sound card. Make sure the mute button is not selected, and you can choose whether or not to have the volume icon in your taskbar here. Click Speaker Volume and ensure they are all the way up, and then back to Volume Tab and click advanced, and make sure your speaker setup is selected correctly or else no sound will work. If you didn't have problems with sound other than youtube before this, don't change anything! If you don't know which speaker setup you have, click desktop stereo speakers. (Or laptop mono speaker if you are on a laptop. Or Monitor stereo speakers if the speakers are attached to your monitor.)
Also: Don't forget to make sure your sound card is selected under Audio -> Sound Recording and Voice -> Voice Playblack and Voice Recording if you record sound through your computer/microphone/webcam.