ISSUE IS RESOLVED - AS OF 22 JUNE 2014
The fix was that Windows was suddenly able to install the correct driver for Nvidia High Definition Sound.
I'm not sure what is causing this issue, but I can't get any sound now.
I've uninstalled my Nvidia graphics drivers, still nothing. Also tried going to Device Manager, update driver, restart etc. Doesn't work.
I tried the audio driver from the MB from this website http://www.asrock.com/mb/Intel/H61M-VS%20R2.0/?cat=Download&os=Win7 and installed it and it still doesn't work.
I suspect it has something to do with Realtek, but I don't know how to proceed. Please help!