There is a red light in the headphone jack and my macbook is muted. Does anyone know what to do or how to fix this problem.
Most likely the "switch" in the headphone plug is stuck. Try to clean it, insert and remove a headphone plug to free it.
the red light is because that jack is actually a dual analog & spdif jack
My thoughts exactly. It's a dual-purpose jack, supporting both analog and Toslink digital audio. The jack seems to think that there's an optical cable connected so the laser is powered up -- and thus, the internal speakers are muted.
Check your computer setup first. If your computer is ok. Test your headphone at other computers to see if it could work. If not, you have to change one.