Using the Ubuntu live CD was a smart move; I hesitated to suggest it, but I'm partial to Puppy Linux anyway... Now we know that the hardware is the most likely culprit. Still, it was worth a shot to eliminate the drivers before looking for bad news...
Try to play a MUSIC CD, then a DVD movie (if you have one handy), then an MP3 file directly from your HDD. If your optical drive has a headphone jack, plug in some headphones while a disc is playing music; do you hear anything? Next, plug the headphones into the headphone jack on the back of the motherboard; do you hear anything there? Make notes of when you hear sound, and when you don't; you might not hear sound under ANY conditions.
It IS possible that your audio chipset committed suicide recently (NOT related to the BIOS update), so open the case and find the soundchip. It should be within a few inches of the ports on the motherboard, but that isn't ALWAYS the case. Look at it CLOSELY and CAREFULLY (using a flashlight and a magnifying glass is the best way), to see if it is discolored, burned, cracked, or otherwise physically damaged. I've seen this happen a few times over the years, mostly on Compaq, Dell, E-Machines, Gateway, HP, and Packard Bell systems; the chipsets were from various producers. The board makers don't make their own audio chips, they simply buy them and solder them to the mobos.
As I mentioned in my previous reply, this very possibly could be unrelated to the BIOS update; I've seen audio chips turn crispy right before my eyes, and it is entirely possible that yours smoked without your knowledge. Your system fans would have dissipated the "evidence" rather quickly, and if it happened while you were out of the room, you wouldn't be likely to find out until you actually tried to play sound.
The drivers have been updated, so now the best case scenario here is that the audio jack for the speakers has a cold-solder joint, or is otherwise defective, causing this problem. That can be repaired with a soldering iron, solder, flux, and some common sense; if the chip is defective, you'll have to install a soundcard and disable the onboard chip in the CMOS Setup program.