In my experience, this is a hardware malfunction. The combined analog-optical audio jacks (in and out) have a trigger to detect which type of cable (1/8" or toslink) has been connected. AFAIK, that's purely a hardware switch. Once that's detected, the OS flips the audio output to that type (you'll see the setting in System Preferences change over from built-in speakers to headphones or optical, with no other options or way to switch it back). Typically, this gets triggered over to the optical audio and won't come back. Occasionally this is fixable by cleaning out the port or using the toothpick trick to nudge the switch. If that doesn't work, the next step is usually to replace the malfunctioning component (which may be built into the main logic board depending on the model).
Where am I going with all of this in regards to Casper? If it's an unfixed hardware issue, I don't think you're ever going to get analog output even if you manage to disable just the optical audio in software (you'll just have no audio). If the red light shining out of the audio jack is troublesome, you might look at disabling sound entirely. If you need analog audio, a USB dongle is probably your best bet.
My two cents.
-Charlie
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Charlie Smith
Desktop Engineer
Information Services Department (ISD)
MIT Lincoln Laboratory
244 Wood St. Lexington, MA 02420
Phone: 781.981.0854
E-mail: charlie.smith at ll.mit.edu
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