I would of thought a broken CODEC would let the machine boot as normal. I guess on the DMA. Maybe the SDMA clock patch (you have one?) has come loose or that CD rom you had problems with killed the DMA as the CDrom is linked to the DMA via the SCSI chip. Unlikely, so check out inside for loose contacts, wires etc.
I think the CODEC contains the sound matrix and you say you are able to send sound in thru the line in to line out so it seems the CODEC is OK. Have you tried Iphigenie, might help source the problem.