No Audio in 7.5.3

Digi 002 Rack
Cubase 7.5.3

Just bought Cubase 7.5, my buddy tried to transfer his Cubase files to me and when I tried to play back the project, the audio would not play but the MIDI would play fine.

I decided to start a new project and just inserted only audio. The audio does not play back.

Anyone have a clue to what is going on here? I have to finish this project and need audio files to work.