No internal speaker output

I am not sure I explained problem clearly. When I go in the system prefs, under sound it reads as: internal speakers, when I put in headphones it shows the difference. The port reads as: built-in audio. Below in the gray area it shows: Settings for the selected device: The selected device has no output controls. Then below that it reads:
Output volume and the mute button is selected. When I go to unselect it pops back on. The speaker itself works, because during various reset attempts I could hear the chime. I can also hear headphones and speaker for brief moment when I manually try to adjust volume control both on key board or in menu, but it will not hold, it drops back to zero.

Weird part is that about 2 hours ago everything seemed normal again and itunes played and I was able to adjust volume without any problems. Then about hour later the volume gray box popped back up on my desk top and went to zero again(all the way to left) with no sound and now the box will not go away. Light gray with volume symbol.

Any thoughts? I'm baffled. Recently put in wireless card and airport extreme base, but when I disconnected problem still occurs.

Thanks again,

Bill