Please excuse a simplistic question, but you mentioned having checked "the system" without mentioning that you took a look in /Applications/System Preferences > Sound to ensure that your volume hasn't simply turned itself off (as has been known to happen).
And since I'm here... Which specific iMac, which version of OS X, and are both your internal and external sound non-functional?
The new Great Equalizer is the SEND button.
In Memory Of Harv: Those who can make you believe absurdities can make you commit atrocities. ~Voltaire