To check that sound is working independently of aRts, make sure that artsd isn't running and then try playing sound through XMMS or another multimedia application that isn't a part of KDE. If that application doesn't play sound, then your general sound setup is probably broken and it's not a KDE problem.

Try playing sound with artsplay /path/to/some/soundfile. Try various formats, ogg, mp3 and wav. Any error messages there might be useful in pointing you in the right direction.

Try setting the aRts output method to OSS. In the KDE Control Center go to Sound & Multimedia->Sound System. On the Hardware tab, under Select the audio device choose Open Sound System. If you are running alsa this will use the OSS emulation, which may give better or worse results.

Running artsd -l 0 from a terminal will give you a lot of debug output, some of which might help you to diagnose the problem. Trying this in conjunction with using artsplay in a second terminal can give a wealth of information. If an artsd instance is already running, exit it with artsshell terminate

Assuming you've installed aRts correctly and you still have the codecs installed your previous KDE installation needed, chances are this is a small problem with your knotifyrc. To confirm this, try creating an entirely new user and seeing if system notifications work under the new account. If they do, try moving your $KDEHOME/share/config/knotifyrc out of the way for your original user to see if this solves the problem.