When i had this problem with sound-out and had tried the PRAM reset to no effect, then I went into the system pref sound control and just moved the slider to the output volume a tad -- sound-out worked right away. Maybe the same thing will work for line-in sound control.
I tried the pram reset with no effect. Then I went into the syspref sound control (for the umpteenth time) and changed the volume (slider) of the output. Immediately the sound came back on through the speakers. Interesting.