Welcome to Apple Discussions, Wing (Winghin)
After you have reinstalled,
repair permissions and then use your Mac's
> Software Update... to get back to the latest version of PB. If
Software Update... tells you that new software is available, you should repair permissions again after the updater finishes.
My G5 Mac's PB is ver. 2.01 (72), and it records sound. However, the most current version number might be different for iNtel Macs. I do not believe that sound recording capability has been removed, unless, perhaps, but a three-year-old who has access to your Mac.
Check your
> System Preferences... > Sound > Input to be certain that your iMac's built-in microphone is your selected "sound input device" and that the "Input volume" is set to a high enough level. If so, your PB should record sound with your video. Sound is NEVER recorded when you take a still picture or four quick pictures.
If you have difficulty and need to post back for other suggestions, please let us know whether you have bought Time Capsule and installed the included software.
EZ
Jim
PowerBook 1.67 GHz w/Mac OS X (10.4.11) G5 DP 1.8 w/Mac OS X (10.5.2) External iSight