Thanks for all the suggestions on the sound problem. This is a good forum.
Finally got something sorted out. I uninstalled alsa-utils using Gslapt then re-installed. I then set alsa as the sound driver in Control Center. Then restarted alsaconf which then saw the soundcard. Then set Skype to use OSS. Then started alsamixer and toggled capture on using the spacebar and then muted most of the unused channels using the 'M' key. Must make sure the master volume channel is un-muted though. Then went to KMIX and made sure that both switches in the OUTPUT tab show yellow (active state). Then store the alsamixer settings using the command 'alsactl store' (no quotes)
I could then hear recorded sound from microphone, play CDs and use Skype.
A couple of problem remain though. When KDE starts, there is tremendous feedback whistling from the speakers. This seems to settle down after a few seconds though. Sometimes need to start KMIX to turn down the master volume setting.
Skype sound quality is still a bit jerky, so may need to do more tweaking here. At least sound is working now, so that is progress. I can now stick comfortably with Vector 5.8 final.
Vector is an awesome distro now. KDE works as fast as JWM does in Puppy Linux and certainly more responsive than Icewin.
To thrash Kubuntu Feisty Fawn 7.04
, all Vector needs is the apt-get system and forthcoming CRM repository facility. May be difficult to implement though - but who knows what can happen. With most of what is needed in software already included in Vector this is not a major issue for me under normal circumstances. So Vector stays on my hard-disk.