I have a macbook running paralles 3.0 build 5608 with windows xp sp2 and parallels tools installed. In Control Panel -> Sounds and Audio Device Properties it says there is No Audio Device. In the paralles vm configuration i have sound active set to default audio/default audio. In the windows xp Hardware->Device Manager it sees a Intel(r) 82801BA/BAM AC'97 Audio Controller. I have reinstalled this device numerous times but it never actually gives me an audio device. I get no sound at all from the windows xp vm.
Try delete Intel(r) 82801BA/BAM AC'97 Audio Controller. from device manager and restart VM, Make Sure that Enable and connect at startup are checked
So enable and connect are checked. When i uninstall the device and restart the vm, xp reinstalles the device after i log in and it still says "no audio device"
