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do a quick test with alias for me. run it. press space to select default audio. and then press z to m. you will get the default sound - is this distorted, dropouts, etc?

Now I get no audio whatsoever.

I'm not sure what's going on now.... as stated above, when I first downloaded and launched Alias, the audio did connect, but was distorted. Now when I launch it, it won't even connect to the audio output. 

I pressed space after launch. No sound. Went to settings>audio and I can see the system audio output, I can click on it and it highlights, but it does not actually connect. The messages reads:

   0 : Built-in Output

   No audio output has been selected 

To verify that it wasn't my Macbook, I quit Alias, launched QB IIx and loaded a recent project. Everything works. Relaunch Alias, no audio... I even tried rebooting completely. It won't connect.  :(