This is unbearable.

Every noise in the game crackles. It seems to happen more in echoy places like halls or dungeons, but the sounds become extremely distorted, with some sound files just not being played at all.

Is there any way to fix this? Is anyone else having this problem?

What system? Maybe post this in the tech support section?

Check the suppport forum mate.Mine sounded just like this.

I'm just about to try a suggested fix - fingers crossed.

Did you try lowererin the sound system sample rate to the 48000 Hz?

Sounds like a unique to you problem, you should post some specs and what you're running at, sound card/divers etc.

IF you have the sound icon showing on your taskbar -- right click on the speaker icon in the task bar - click Playback devices - in the sound box that opens double click on the Speakers to open the Speakers Properties box - click on the Advanced tab - click on the drop down box and select 24 bit 48000 Hz (studio quality) or something less than that - click Apply and OK (this changes the sampling rate down to one the game can properly handle and gets rid of the crackle) -- Launch the game and see if it helps !

It's anything but to be fair mate.Theres a lot of people having this problem.

The general concensus seems to be in lowering your sound quality to 44100 16 bit.

I'm just about to give it a bash after this cuppa

This worked for me, setting it down to 4800 hz, a few hours later it happened again. Restarting the program then seems to fix it, I imagine it will happen again.
Once I got through the starting area and out in the outside world, this game has blown me away. i can't believe how amazing it is. I haven't felt this way in a video game in 6 years, it's everything I dreamed oblivion would be but wasn't.

If you have problems with the sound, it might help if you say what your sound card is.

I had cracking sound on my X fi titanium HD too - easily fixed by disabling all the X fi features in the sound properties like EAX, crytalizer, Cmos 3D or something.

If you have Realtek, turn off stuff like Dolby or any other features and this will most likely fix it.

This fixed it for me. Thank you!