Windows 7 - Sound distortion problem when wireless is on

From around one month or so i am having sound distortion problem in between playback of music, movies and even during gaming, the mouse pointer also stucks when this distortion comes, but when i turn my wifi off the distortion is no more.
I have tried reinstalling my wireless drivers, It is Intel r wifi link 1000 bgn and no new driver version is available from Dell's website.
Also the cpu performance graph reaches top when distortion occurs.
I have also updated to the latest BIOS.
Please help guys, sound distorts once in a minute.
I have 4 gb of RAM with i5 processor, laptop model is Dell inspiron N5010.

Try turning down the Tx/Rx power level in your WiFi adapters advanced properties tab...

tx/rx is already down to the least which is 20%.

Try the latest drivers for your WiFi adapter from Intel's website would be the next logical thing; but remember this will most probably reset the devices properties to default values.

already tried that, the one installed on my laptop is the latest one.

Can you try an alternative WiFi card; either the same one, or another type?

does that means that my wifi card is having the problem and needs to be replaced?, my laptop is currently in warranty and should i contact Dell..??

Not necessarily, it's a process of elimination...

Ok thanks and what about reinstalling my OS, will that help??

I can't think of how your OS is causing physical radio interference.

The probable cause is the WiFi card; but that said it could be an assembly fault whereby a sound cable has been inadvertently laid close to the WiFi cards antennae pigtails...

If it were me, and if I didn't have an alternative WiFi card to hand, I think I might call Dells technical support line...