I also have this problem (since 7.10), and would hugely appreciate your help. I am using ASUS laptop with 2Gb RAM and 2.0GHz Intel Core2Duo processor. I can't say anything about 7.04, because this is a new laptop, and the first Ubuntu version installed was 7.10. By the way, the laptop had Vista Business pre-installed, and the sound was fine there. It was also fine on XP after I downloaded appropriate Realtek driver.
I downloaded source and built ALSA 1.16 under 7.10 (as described in multiple forums), but with no improvement. As far as I know, this is the latest version of ALSA, and it is built in 8.04, so no more build can help.
I played with various options in /etc/modprobe.d/alsa-base as well (as this was advised in various forums), but with the same outcome. Literally, nothing helps so far.
Maybe I am missing ticking/unticking some option?
$ cat /proc/asound/card0/codec#* | grep Codec
Codec: Realtek ALC660-VD
Codec: Motorola Si3054
And here is the output of 'lsmod | grep snd' :
snd_hda_intel 344728 3
snd_pcm_oss 42144 0
snd_mixer_oss 17920 1 snd_pcm_oss
snd_pcm 78596 2 snd_hda_intel,snd_pcm_oss
snd_page_alloc 11400 2 snd_hda_intel,snd_pcm
snd_hwdep 10500 1 snd_hda_intel
snd_seq_dummy 4868 0
snd_seq_oss 35584 0
snd_seq_midi 9376 0
snd_rawmidi 25760 1 snd_seq_midi
snd_seq_midi_event 8320 2 snd_seq_oss,snd_seq_midi
snd_seq 54224 6 snd_seq_dummy,snd_seq_oss,snd_seq_midi,snd_seq_midi_event
snd_timer 24836 2 snd_pcm,snd_seq
snd_seq_device 9612 5 snd_seq_dummy,snd_seq_oss,snd_seq_midi,snd_rawmidi,snd_seq
snd 56996 17 snd_hda_intel,snd_pcm_oss,snd_mixer_oss,snd_pcm,snd_hwdep,snd_seq_dummy,snd_seq_oss,snd_rawmidi,snd_seq,snd_timer,snd_seq_device
soundcore 8800 1 snd