This is in reply to my own message, just thought I would answer it so that if anyone else was having the same issue they could fix it. 

Answer:   I upgraded to the newest version of Asterisk, recompile, install, and now I can press the hold button on the phones and hear the music.  This is what one entry in my sip.conf looks like, I am using ulaw.

;;;These are concerning Polycom soundpoint phones.  Be sure to have newest boot rom and sip ;;;version installed on phones.

/etc/asterisk/sip.conf (one entry listed with general info).
[general]
port=5060
bindaddr=192.168.3.2
context=default
musicclass=default
disallow=all
allow=all
dtmfmode=rfc2833

[119]
type=friend
username=119
secret=119
host=192.168.3.28
[EMAIL PROTECTED]
dtmfmode=rfc2833               ; Choices are inband, rfc2833, or info
disallow=all
allow=ulaw                     ; dtmfmode=inband only works with alaw or alaw!
progressinband=no              ; Polycom phones don't work properly with "never"

/etc/asterisk/musiconhold.conf
;
; Music on hold class definitions
;
[classes]
;default => custom:/var/lib/asterisk/mohmp3,/usr/bin/madplay --mono -R 8000 --output=raw:-
default => quietmp3:/var/lib/asterisk/mohmp3
;loud => mp3:/var/lib/asterisk/mohmp3
;random => quietmp3:/var/lib/asterisk/mohmp3,-z
;unbuffered => mp3nb:/var/lib/asterisk/mohmp3
;quietunbuf => quietmp3nb:/var/lib/asterisk/mohmp3
; Note that the custom mode cannot handle escaped parameters (specifically embedded spaces)
;manual => custom:/var/lib/asterisk/mohmp3,/usr/bin/mpg123 -q -r 8000 -f 8192 -b 2048 --mono -s


-----Original Message-----
From: [EMAIL PROTECTED]
[mailto:[EMAIL PROTECTED]] On Behalf Of Derrick
Stensrud
Sent: Saturday, July 09, 2005 3:27 PM
To: [email protected]
Subject: [Asterisk-Users] polycom soundpoint 300 sip phone and hold music

I have an extension setup in my extensions.conf for hold music.  ext. 600.

If I pick up a phone (polycom soundpoint 300 sip) and dial extension 600 
I hear the hold music playing.  If I call another extension and pick it 
up and put the call on hold with the hold button on the phone I hear 
nothing at all.  Does anyone have any experience with these phones and 
getting the hold button to work? 
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