This does happen from time to time. First try plugging the headset back in and out a couple times to see if this clears the setting. If this does not help, what I have found to work most of the time is to blow as hard as you can in the headset socket (but try not to spit while you do it). It seems that often a piece of dust gets in there and shorts the headset contacts. (Really the only troubleshooting steps beyond this is hard reset and then warrantee repair so keep your fingers crossed and do the above things first)
FYI, I just got this back from the guy who asked the question in the first place : "Unbelievable!! It actually worked. I had tried everything, including changing the values in the registry of the phone. The mpx has its dust cover always snapped in, so I never would have thought that dust could have done it. You are a life saver."
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