From what you are saying it sounds like the internal speakers work fine, but the audio out is not outputting sound to these devices.
Take a look at this article explaining what to do if the audio does not switch:
Mac Pro: Audio may not switch when new devices are connected
Mac Pro implements discrete audio engines for audio processing.
When using either the Mac Pro computer's analog audio line-out port, optical digital out port, or external devices such as USB Speakers or USB/FireWire audio interfaces, you need to switch manually to the appropriate device to enable its operation:
- Open System Preferences from the Apple () menu.
- Choose Sound from the View menu.
- Click the Output tab to select output devices or the Input tab to select input devices.
- In the "Choose a device for sound output/input" area, select the device by clicking on it in the list. The selected device becomes highlighted.
If the issue persists or the input is not listed in the System Preferences Sound menu, then I would recommend resetting your PRAM and your SMC.
About NVRAM and PRAM
Intel-based Macs: Resetting the System Management Controller (SMC)
All the very best,
I was searching in the "Mac Mini" forum when this thread came up.
It seems like there is a "diagnostic" process that the machine goes through. I say that because, when i plugged a mini jack into the head-phone output, nothing happened. I checked system preferences and only the digital output was listed.
While reading and following the directions in the above post, LO AND BEHOLD, the analog output showed up. :O
It's as though the mini "sensed" the presence of the analog device.
Anyway, it's working now. :-)