<snip>
Audio is an OSS module and should not be used with ALSA. Use
snd-usb-audio instead. I think the USB audio device you have is a
webcam with a microphone.
</snip>

Removed audio: /sbin/rmmod audio

<snip>
Adding:

alias snd-card-1 snd-usb-audio
options snd-intel8x0 index=0
options snd-usb-audio index=1

</snip>

For some reason modprobe could not find usb-audio, so I just unplugged the other crap (not using it anyways -- I'll get it to work later I guess). I only added the line:
options snd-intel8x0 index=0
because I didnt' get the usb audio configured

I rebooted and sound works!! Thanks a lot for your help. I'll do some research on the usb-audio issue and see if I can't get that working. I have a webcam, but I think the device we were seeing with a mic was actually a M$ Gamevoice.

Regards,
-Ron