So I see the first view of Rapture, the bathysphere stops, I can see some guy standing outside the window,..and then nothing. I can look around with the mouse but can't move, interact or do anything else. This is version 1, and the 1.1 patch doesn't work. There's no sound either after the air crash opening movie.
Okay, apparently fixing the sound fixes everything else.
Open the 'Sounds' applet in control panel, go to the tab for recording devices, right click, and choose 'show disabled devices'. From here, select and enable the recording mixer, and then the sound works fine. This is a solution for Windows 7, and it also works for Windows 8 (which I'm using).
After the sound started working, the scripted events also work, and now I'm able to proceed further.