Ok for some unknown reason alsamixer was setting volume of every single sound device to 0 and I found a solution to this for myself and I hope it will help others:
Open terminal and do this:
service alsa force-stop
Follow the wizard – mostly just press [ENTER] when something pops up.
Set the volume at the wanted level by using left right up and down arrows and [m] button to mute or unmute certain devices and press [ESC] to leave the mixer.
and then add
at the end of the
file using Your favorite text editor (as root).
reboot – Your settings should be restored.
I am running fully updated Zen Mini 2010.10 with Kernel 38.3 BFS.
Hope this helps to somebody someday.