Sounds like something got pooched a bit for 7 there. Try running the system file checker with the dvd you burned in the drive to see if that will repair the Windows file for that. Is this for onboard sound or an addon?
If you have an addon like a Creative sound card you would rely on the volume control panel and audio console options seen there and wouldn't even use the Windows adjuster. Your other option is to go into the Control Panel>Recovery and run the system restore back before this was first seen. Something you added on lately may have knocked it out on you.