First of all, thanks for remembering and helping me with my problem. Last week I also tinkered with some settings but nothing happened. But next day when I turned on my PC the sound was back. Then again the very next day it was gone. Frustrated and still not knowing what the problem or solution was, I tried again to tinker with settings and reinstalling drivers. Nothing happened again so I used the PC without changing anything. And after a few days later the sound was back.
At that time while the PC was powering on, I thought I noticed (not sure though because I wasn't really paying attention) it was resetting during BIOS as though something has changed as it took longer than usual. Anyway since then, HDMI sound has been working! As an attempt to keep the sound working, I reinstalled Windows 7 and made sure ATI driver was installed instead of Realtek this time. So now my default playback device indicates "AMD HDMI Output" rather than "Realtek HDMI Output" unlike before (removing Realtek driver and installing ATI driver didn't change this before).
It's been several days now that the sound has been working. I still don't know what caused it but at this point I'm just hoping it stays. Any clue what might be the problem based on my experience?