Optical Audio out stuck on on a MacBook
When I plug my headphones into my iMac (27-inch, Mid 2011; OSX 10.8.1) and try to adjust the volume, the volume popup shows a greyed out speaker and there's a circle with a line through it signalling that it isn't working.
I've tried the headphones with my iPhone, other iMacs etc and they're fine. This is incredibly frustrating. Other headphones don't generally work either.
In Sound preferences the headphones are being listed as "Optical digital-out port" which is incorrect and would explain the problem, but doesn't help me fix it.