I have a Motorola droid 2 and have had the follow issue
When i plug my mic jack in to output to my car the sound on the handset is muted (correct) but there is no sound output through the mic jack now.
I am 99% sure iheartradio(dont ask) is what caused this(exact same thing happened 6 months ago)
Now no matter what app you use the output on the mic jack is perm muted. When you initially plug it into the stereo you can hear audio for .1 seconds then its muted.
I am 90% sure i found a memo from a iheart dev that involved clearing the apps cache then pulling the battery to fix but for the life of me i cannot find it again.
Seems that iheart has messed up the volume switching that happens when you plug a mic in (mute onboard/max mic jack) or something like that. I have cleared its cahe/deinstalled factory reset and nothing is working so far.
I called my tech support but since i heart messed up the system software settings there really is not alot they can do outside of sending me a new phone.
Looking all over the net for that fix i found 8 months ago but for the life of me i cannot find it again( i had it bookmarked and deleted it 2 weeks ago ;\)
Was thinking of rooting my phone and trying to find a EQ/mix to manually control the output vol
Any ideas are welcome at this point.