I guess nothing is activate there which causes the issue. It's either the audio driver or Windows doing this. And have you try to check the checkbox 'Enable audio enhancements' on the Advanced tab as suggested in the wiki? As you said it seems some audio compression is going on.Notably, AudioPCI supports several digital effects reverb, chorus, and spatial enhancement when used with Microsoft Windows 95 and later versions of Windows.
Simply connect to the sound card and the advanced digital signal processing sound card will provide rich 7.1 audio, letting you locate sounds flawlessly. You can also enable Microsoft Spatial Sound by right-clicking the Volume icon in the taskbar. In the Spatial sound section of the page, if the device supports spatial sound, you can select one of the available formats from the Spatial sound format dropdown. From the Sound control panel, select an output device and click Device properties.
