OK, I finally figured it out. It has nothing to do with the recent security update. Some piece of junk application modified my audio settings. When I figure out which one, I am going to be writing a nasty letter to the programmer!

Here is the solution from Apple.

Anyway, I did learn a few things and found some nice codecs for QuickTime in the process.

AC3Codec.component

Apple – QuickTime – QuickTime Components

DivX 6 for Mac for Intel/PPC (Universal Binary) – Beta 2 | DivX Labs

XviD QuickTime Component