This might sound odd, but I have seen a load of Sound Cards go all crackly because of a conflict with a video card. I would start as Cactus said and update Direct X to 9.x. Then make sure your video card drivers are up to date. Then if that doesnt work, a cheap sound card might be the way to go.
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good idea..if the old card is an onboard one you probably need to disble it before you put the new one in..but I m not sure(no experience with onboard cards)
>>> It only started recently, after I loaded a game for the kids and I think it tried to load some old Active X stuff (version 5), but updated that to version 7 now as well. <<<<
I would try uninstalling the above, and see if it is ok then