I use the same sound card and have no problems with SH3, I am also running XP Pro. You could try going to control panel/Audio Console and try disabling some of the effects such as:
X-Fi Crystalizer
EAX Effects
X-Fi CMSS-3D Virtual
or even change the sampling Rate to something lower.
Also check under Device Information to see if the Wave and Mixer are in fact set to the X-Fi Extreme audio card.
Also check in Device manager to see if there are any conflicts.
BTW, have you disabled the on board sound?
