I hate to be one of those guys that doesn't have a solution, just the same problem, but I'm right there with you. I have a Sound Blaster Live! Platinum (with Live! Drive). It's not the 5.1 model, but most people I've encountered have the same problem with the 5.1 version.
I've done a great deal of investigation, mostly into Vista forums (I didn't think the drivers from Vista to 7 would change that much, but apparently they did.), and I found a whole lot of people with similar problems while using Vista. Here is the data I've collected.
I'm running Windows 7 Beta Build 7000 on an AMD K7 Athlon XP 2400+ processor.
1. I get horribly distorted sound (i.e. too much bass, as first poster described) in when I use the drivers that Windows Update provides me for my card (I think it is a generic EMU10K1-based card driver).
2. I get decent quality sound, but crackly and some pops, when I use a hacked driver by NGO that is supposed to be "fix" for Vista.
3. Another fix I have encountered is to use the latest Vista drivers for the Creative X-Fi card series, except to select the WDM EMU10K1 driver manually (running the setup gives a blue screen). This has the same effect as Scenario 1. above, except for one thing. If you go into the properties, and select 5.1 in speaker configuration, it will sound better. I thought this had fixed it (as people suggested it has in Vista), but it turns out I started getting the crackling and popping again as in Scenario 2.
I did a lot of other things in between, including messing with DMA mode on my drives in my BIOS, updating my motherboard chipset drivers, etc., but nothing gave me any change from the two effects I noticed above.
Anyone have similar/different experiences?