Ok, I've been struggling around with this problem for quite some months now. I found other problems having the same problem via google search, and I asked on the IRC channel, but nobody could help me.

Basically the problem was this: I could play music with the helix engine, but not with xine. It didn't work since amarok 1.3.x and even 1.4b3 did not resolve that problem. Well, today I did some clean up on my user account and compared it to a fresh user account, and I also checked amarok and noticed that xine worked there. It took me some searching, but actually, the solution is REALLY simple:

just delete
~/.kde/share/apps/amarok/xine-config
That's all. And that took me 4 months I guess...

Now hopefully this helps some other people out there, too .

oh nice one...

That file is often overlooked!  Although it would explain why suggesting people delete ~/.kde/share/apps/amarok/  would work

If xine gets set to an audio plugin that doesn't work, there currently isn't a good way to switch it back.