Also, check your cable type... I once bought a "universal" cable that would drop the sound from the PS2 if the Xbox was also plugged in. I ended up getting rid of that cable and just running my PS2 on component and my Xbox on S-video.
If you have a Target store nearby, they carry a Monster brand ps2/xbox S-video cable that can run both without degrading the signal. It might suit your needs if you're running an interlaced signal.