I don't believe it is an interrupt conflict since I determined the current set up for 4 identical computers a long time ago to get the video, sound, and NIC cards all on different interrupts. The problem only began with the latest World of Warcraft patch.
It is a very strange problem. I can fix the problem by reinstalling the video drivers, but within minutes of my wife starting World of Warcraft (since their latest patch), her sound gets corrupted for all DirectX games.
It seems like somehow Direct3d and DirectSound share some information for determining 3-d sound computations? That is the only thing I can think of that would get the results I am seeing.
In Operation Flashpoint, the background sounds such as the birds chirping, breathing, wind blowing are very strong. The gunshot sounds and explosions vary: If shooting from the hip they are loud. If shooting with sights raised, they are very faint... as if far away. World of Warcraft has a similar result, but no matter what your view is, the background music and sounds are loud, the spell casting and weapon sounds are muffled to the point you can barely hear them if at all. The fact that I can duplicate this problem on another PC with a 9800 Pro by installing and running WoW while not having the issue with my main A64 rig with an X800XL suggests to me that I should try a older Catalyst with the 9800 Pro. Maybe I should try going back to the tried and true 4.12s even though they run WoW pretty slow to see what happends?
From WoW Sound Trouble-shooting documentation:
1. Some sounds are playing much louder than others: This is often the result of inappropriate audio settings. Delete the Config.wtf file. This file can be found in the World of Warcraft WTF folder (C:/../WoW/WTF/Config.wtf).
2. Sound starts to decay until no sound can be heard: Try reinstalling DirectX and reinstalling the latest drivers for your sound card. It is possible that some program has modified the DirectSound or driver settings.
I think they are the ones modifying DirectSound or driver settings

and somehow completely uninstalling and reinstalling ATI drivers repairs those changes? Deleting the Config.wtf file seems to have worked on one computer, though I didn't play for very long. Trying to fix my wifes PC now.