The problem with Skype re-occured, probably because of an automatic update. This time I was able to make it work on Vista by downgrading Skype to version 184.108.40.206. Strangely, the version designed for Windows XP and Vista did not work with the same sound problem. The version for Windows 7 and above does work, but produces a security error at startup that can be easily bypassed.
Version 220.127.116.11 (Windows 7 version) can be downloaded here: http://www.skaip.org/skype-7-34-0-102-for-windows
There seems to be a problem with the latest version of Skype and Windows Vista.
The program starts and appears to operate normally, but when making a call, incoming audio does not function correctly. When calling the 'Sound Test Service' contact, audio works for a few brief seconds but then cuts out.
After looking at two Windows Vista computers (a laptop and a desktop with different sound chips), I concluded that the only way to resolve the problem was to downgrade the version of Skype to one that still worked OK.
Fortunately, 'oldversion.com' still has a copy of Skype 18.104.22.168 available, and this works with the audio:
I was able to uninstall the newest version using 'Programs and Features' in Control Panel, then reinstall 22.214.171.124 using the above link. I then disabled automatic updates within Skype (Tools - Options - Advanced - Turn off automatic updates - Save) to prevent the same problem occurring.