I have a dual 2.0 G5, rev A., Elgato EyeTV 500 HDTV tuner, Logitech Z-5500 sound system using optical out from my G5 running 10.3.6. The problem was occurring sometime after start-up because I would hear the start-up "gong" but after the menubar appeared I would hear an audible "pop" and all sound would go out. It was not a hardware fault because when I booted my back-up drive with another version of 10.3.6 it would work fine. I finally took a risk and used Carbon Copy Cloner to transfer over some system files from my back-up to see if it was a corrupted core audio file somewhere and that did the trick. The sound all came back but then after a few hours of usage the sound was lost again. There seemed to be no rhyme nor reason why - something seemed to be corrupting core audio or taking over sound in some insidious way.
After a few days of pulling my hair out, I finally figured out what the root cause of my total loss of sound on my G5, internal - external - headphones & optical outs - the whole shebang. I noticed the "pop" was when my menu extras were loading - I use, and love, Menu Meters so I uninstalled it and rebooted and nothing happened. One by one I eliminated everything in my menubar as a precaution and the last thing I thought would affect sound was my Contour Shuttle software. When I remove the Shuttle software, ver. 2.0.2 btw, the sound problem goes away!
Somehow there must have been some kind of problem with the contour's USB driver with sound. I realize my set-up may have been fairly uncommon with some oddball hardware like the eye-tv 500 and probably not too many people are using the optical outs on their G5 Powermacs and iMacs but the moral of the story is that USB drivers and devices can do some surprising things so make sure to uninstall the USB drivers when trouble-shooting. I never would have guessed that something like that would have happened.
-Jerry C.