Frustrating problem with external speakers

I am setting up a G5 Dual core for my son who is a graphic designer. I added a new hi res monitor, upgraded all the software to current OS X 10.4 and all peripherals work well and wireless access works fine ...except..I cannot get any sound out of the external speakers. The headphone jack works for headphones on the front panel, but not when you plug in speakers. Ditto for the analog audio out in the back panel. The digital out glows red, but I don't have any digital speakers to plug in. I don't see speakers showing up in the hardware profiler as one hint suggests in Apple support. I have turned the system off and back on, plugged everything back in and no luck. I tested the altec lansing speakers on my single core G5 and they work fine. The only thing I see different in my 2 systems is that the dual core has 2 sound cards. If I select the second sound card, it says "No output" so I keep the first sound card selected and it asks me to configure the speakers. I have tried to reload the operating system for the disks that came with the Mac, but I can't seem to get anything to happen except that the optical drive spins at a very high rate and I get an apple icon on the screen that stays there for 5 -6 minutes. Any ideas?

I can't pretend to be familiar with that model of iMac, but picking up on your statement "The digital out glows red", just where is that red light coming from?

Numerous posts on Mac audio-out problems report a red light showing inside the audio port/socket. That indicates a stuck contact, which is often remedied by inserting and removing the audio jack several times, twisting it when inserted etc, to free up the contact. Some recommend using a dummy jack, even a toothpick or matchstick (not my choice). Perhaps that 'fix' will work for you.

By digital he means optical. That's where the red light is coming from. You can probably find yourself an old set of logitech z680s for a good price. They pack a ridiculous punch too (like, I'd rattle my whole house with them back before I blew the fuse). I'd invest in some of those. Not sure why the port isn't working. There are 2 headphone ports on the G5 tower though. One on the front as you said, and then another on the back of the machine, on top of the optical in and out. Try the port on the back?

well...I will try that additional headphone port, which I didn't notice. And by digital...yes I did mean optical. It seems from some posts here that the optical out glowing red is normal..meaning it's working.

I can say that the normal audio out stereo jack on the back does cut out the internal speakers as you would expect, it's just that nothing comes out....Headphones do work in the front headphone jack.