Can you open KMix application and press the Mute key and see which Output channel is being changed (Master, PCM, Headphone...)? Here it changes "Master" channel and this works properly. Do you expect mute on speakers or headphone jack?
** Changed in: kdeutils (Ubuntu)
Status: Unconfirmed => Needs Info
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Mute Key showing OSD but is not working
https://launchpad.net/bugs/58751
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