Thanks for the detailed reply. That should make it easier for us to fix.
Your current audio device is called 'onboard' or 'integrated', meaning the sound chip is embedded in the motherboard. This is very common and not a problem. You just need to disable the onboard sound in BIOS (tap F8 at startup) and then reboot into Windows, remove the onboard device with the red X from Device Manager, and install the drivers and software for the Soundblaster card. Reboot to activate the new driver. This should fix the sound problem, but you might also have to reinstall DirectX and then run the dxdiag sound tests again.
Make sure your speakers are plugged into the card and not the onboard jacks.
