Update:

I ran some tests with the Voxlap engine, such as the Cave demo and the sample game that comes with the Voxlap_src release; The audio worked fine.

The problem still persists after 4th uninstall/reinstall of AoS. I'd really appreciate it, if someone came up with a solution.

Thanks to the guys who have already made suggestions.

I can rule out the audio output hardware, as the recording was made directly from the sound card's output. I also know, that the Sound card itself is not malfunctioning, as the problem replicates on the onboard AC'97. I Haven't installed anything that would run as a process in the background.

Audio works perfectly everywhere else but in AoS.

Well, try to disable everything which could make a conflict, and also try different stereos/speakers/headphones, incase old ones just are broken. Other than that, I can't help.

@Monsteri

It's possible that I have, but AoS worked fine after installing the newest software a couple of days ago.

Have you installed any programs lately, which could cause a conflict with your sound drivers or something?

@monsteri

Yep. once last nigth and again about an hour ago or so

hmm, tried restarting your computer already?

@Jackster

I've reinstalled twice, no effect.

Reinstall AOS?

What I hear is too difficult to try to explain with words, here's a recording

http://www.mediafire.com/?s9h87cwlhwdczxq

The problem emerged after connecting another monitor to the computer. Disconnecting said monitor, however, does not fix the problem. Version 0.49 worked just fine before.

I can listen to music, I can play other games and I can record and play back audio just fine. It only comes up with AoS, which leads me to suspect a bug instead of hardware/driver fault.

My sound card is a dated Sound Blaster Live! and the drivers for it are as up to date they'll ever be.