I have exactly the same problem with a Saffire and new Sony Vaio running Windows 7. It doesn't matter what the audio software is - in my case I'm trying to use DJ DSS and lose the audio after just a handful of minutes.
I appreciate your latency workaround - it's ugly but is better than nothing. I'd planned to use this setup for a live show and will be screwed if I can't get this working.
Please let me know if you find a solution - I'll do the same.