Coming into this a bit late, but I'm having something of the same issue.....bought an X-Fi PCIe Titanium, because my old Audigy2 died on me. While that was in the mail, I installed Win7, ran onboard audio fine for a bit - music played normally in all players, videos ran fine in all players and on websites like youtube, online gaming sound worked fine, including voice-chat. Installed my X-Fi and I've had nothing but problems. Regardless of media player, I cannot get any type of video or audio file to run for more than 15-20 seconds without it getting stuck in a sound loop that sounds like a skipping cd. It won't go away until I close out of the application I had running - foobar, Firefox, online game, whatever. Skipping ahead or farther back in the file doesn't change anything. Online gaming, in-game sounds work fine......until I have to use voice, in which case I get about 5 seconds of extremely compressed audio from other players (think Alvin from the chipmunks as far as pitch), and my mic completely cuts out, and all game sounds go kaput. If I alt-tab out of the game and jiggle with any of the settings on the X-Fi (resetting something to default, for instance), the sound comes back for 4-5 seconds, then does the exact same thing.
I've tried the cd drivers in normal mode, in Vista compatibility mode, XP compatibility mode, updated drivers from Creative's site in all the aforementioned modes, and the new Daniel K modded drivers in all the aforemetioned modes. Nothing. Sound still does the exact same thing. Onboard still works just fine, and I'm almost to the point where I'm going to pull the new card out of my machine, stick it back in the box, and shelve it for a while, and just deal with horrible sound in Win7.....DX10 and fps increase are just too good for me to play games in XP and have better sound. (Another note - sound card works fine in XP, although all the options aren't available in the console, which I find a bit perplexing....evidently the FlexiJack thing isn't XP-compatible?).
This is the only place I've seen the sound loop issue I'm having mentioned.....everything else relates to the loss of 5.1. So, am I looking at the same problem - simply bad drivers that aren't going to be fixed any time soon? Anything else I could try to get this thing working right? Uninstalled and reinstalled Win7 fresh, done everything else I can think of....just out of ideas. I can't swap internal ports because my board only has one PCI-e 1x slot (not to last long, as soon as tax returns come back.....).
Another possibly incidental thing that I've discovered - I get severe crackling/popping while playing music (for the 15-20 seconds that I can) in Win7 when Aero is down (getting consistent Aero crashed whenever Win7 starts up, and it refuses to work....but that's another issue); however, in the few times that Aero has stayed up for a few minutes, I can play music back with no audible issues until the loop issue - no crackling, no popping, nothing.
Sorry for the long post, but this is just making my brains hurt.