Well, as far as I can tell there's a lot of problems still with the sound code and some sound cards like Audigy. Things which used to work in 1.2 suddenly don't work in 1.3/1.31 anymore, etc. So have you tried different settings for the Sound acceleration slider in dxdiag.exe ? If I want to play Counter Strike without any mysterious mouse lag, I have to put the sound acceleration for my SB Live in Xp to 'none'. All other settings ruin my game
Edit : oh, and both of you, if you didn't already, try a 3x.xx driver if you have a NVidia card, the 4x.xx series has a lot of problems.