I've solved my problem, I just wanted to let other people know who might come across the same issue, because I couldn't find anything when I googled the error message.
If you're running SheepShaver from linux (where OSS is now replaced with pulseaudio) and you get a dialog box saying "Sheepshaver warning: No audio device found, audio output will be disabled" and in stderr it says:
WARNING: Cannot open /dev/dsp (Input/output error)
WARNING: Cannot open ESD connection
then try running "padsp SheepShaver" instead. I'm wondering if this should be part of the instructions for using SheepShaver on linux
, because from what I've read, pulseaudio is pretty standard nowadays so although /dev/dsp exists, it won't work without the padsp wrapper.