If you have checked the audio plug is definitely in the correct socket, that the sound level hasn't somehow gone to 0% or Mute mode been selected by a stray infrared burst (from the Roku remote or some other random device), etc, can you please send a PM to RokuDaveC giving him the MAC address of your M1001.
As far as I know (I have a M1001 also), the mute problem was solved in the 2.7 release (ie in the last beta build before the release and it continues to be ok in the release version) for all the people who were testing it during the beta process.
Current speculation is there is some series/subset of M1001 devices which have a slightly differing hardware which were _not_ tested (or at least not found to be broken in this respect) during the 2.7 beta process.
If Roku can get the MAC addresses of any M1001 devices which still have the muting bug with the released 2.7 firmware, they can hopefully rummage through their stores - or at worst borrow a device from a friendly nearby customer - and get a still-affected device (ie from the same production run of the physical device) into their development/test environment and fix the remaining muting problem.
Anyway, assuming you've checked all the "pre-qualification" stuff I mentioned above (and from your other posts I'm sure you've done so by now), can you please PM the details of your device to RokuDaveC (not sure if any of the other Roku* people should be sent this as well) and hopefully the problem can get tracked down and fixed sooner rather than later.