Today I was presented with a Windows 7 Home Premium laptop, that until a couple of days ago had sound and LAN connectivity.
The sound worked when diagnostics were run, but would not run when Windows 7 was loaded. So I knew it was not defective hardware.
The solution which was relatively easy to implement took a while to discover and I will update this post at a later date with the troubleshooting steps.
The solution was to add to the local administrators group the networkservice and the localservice
This can be done by running these two commands from an elevated command prompt:
net localgroup Administrators /add networkservice
net localgroup Administrators /add localservice
Once these two commands are run, restart the laptop and if your issue was the same as mine, sound (and LAN) should now be working.