Try a reset: Simultaneously hold down the Home and On buttons until the iPad shuts down. Ignore the off slider if it appears. Once shut down is complete, if it doesn't restart on it own, turn the iPad back on using the On button. In some cases it also helps to double click the Home button and close all apps from the tray before doing the reset.
I don't think you are using the settings correctly. You do have system sounds muted and there is no reason why you cannot unmute system sounds and have the screen orientation unlocked as well. You can have both at the same time. See if this makes it a little clearer.
System sounds can be muted and controlled two different ways. The screen lock rotation can be controlled in the same manner as well.
Settings>General>Use Side Switch to: Mute System sounds. If this option is selected, the switch on the side of the iPad above the volume rocker will mute system sounds.
If you choose Lock Screen Rotation, then the switch locks the screen. If the screen is locked, you will see a lock icon in the upper right corner next to the battery indicator gauge.
If you have the side switch set to lock screen rotation then the system sound control is in the task bar. Double tap the home button and in the task bar at the bottom, swipe all the way to the right. The speaker icon is all the way to the left. Tap on it and system sounds will return.
If you have the side switch set to mute system sounds, then the screen lock rotation can be accessed via the task bar in the same manner as described above.
This support article from Apple explains how the side switch works.
Thanks for the reply, still no joy.
Is there a setting for soft mute other than the side switch ?I have tried a reset in settings, still no change.
I find it strange that if I just change the side switch from mute to rotation the system sounds work, and then back to mute then is doesn't. I have checked in double click home button side switch and the sound is not muted. This is driving me mad.
Weird. I will tell you how I have my iPad setup and you can try it and see if it works. If it doesn't, you have something funky going on.
In my settings I have the side switch set to lock rotation and the switch itself is in the up position - you cannot see the orange dot indicating that the screen rotation is unlocked and I do not see the padlock icon. My screen rotates just fine, obviously.
When I double tap the home button and swipe to the right, the speaker software switch does not have a line through it indicating that systems sounds are not muted and I can verify this because I have keyboard clicks, email notifications, sounds in apps and so on.