Curious: have you tried removing all drivers, then rebooting? I keep thinking this has to do with Windows behaving funny specifically when trying to communicate with the sound device, yet....

This could have something to do with your media player, because VLC, for example sometimes manipulates my WAVE output if I adjust the internal program volume, even after the application is closed.

Lastly, I would consider a different set of 'sndrec32' and 'sndvol32' to copy. I also was hoping you could run an application, just to see if sound is audible in something like a game or other app? That may help determine the source of the problem. Maybe even grab a different media player, and play songs or movies, just to see what happens.

I wish you best of luck in the meanwhile, that's a truly irritating situation you got.