My sound device in windows was set to output at 192khz 24bit. When I set this back to 44.1khz 16bit it fixed the problem!
So to check, in win7 go to Control Panel -> Hardware and Sound -> Sound
Pick your sound device that is set as default, click Properties.
Go to the Advanced tab and make sure the 'Default Format' it is set to 44.1khz 16bit.
I actually was able to set mine to 96khz 24bit and it works aswell, just doesn't seem to like 192khz.
For those on Windows 7, set the Compatibility Mode on the EXE to XP or as Vista Service Pack 2 and run the game as the Administrator
As always, make sure your Video, Audio and Motherboard Drivers are up to date.
