After lots of trial and error I figured out the solution. This error is 100% caused by the March 2021 update for Surface Laptop 3.
The audio driver is not under the expected Sound area in Device Manager, for some reason it's under System Devices, once I found that out it was pretty straight forward.
Edit: First try this.
- Right click the speaker icon on the taskbar and then select Troubleshoot sound problems. This will start the Get Help app which will scan for and fix the issue.
- If that doesn't work try the steps below:
1. Open Device Manager, expand System Devices
2. Look for and right-click on Intel Smart Sound Technology (Intel SST) Audio Controller
3. Select Properties then the Driver tab
- Click "Uninstall Device", when prompted also click the checkbox to "Delete the driver software for this device"
5. Do the same for Intel Smart Sound Technology (Intel SST) OED
6. Restart your Surface Laptop.
Should now reinstall the correct drivers and also auto install a new RealTek audio console from the Microsoft Store. If the driver does not install then go back to the Device Manager and click Action > Scan for Hardware Changes.
Hope this helps someone.