aaarrrgh
after 3 formats/windows installs everything is working.
after getting spdif working, i finally gave up and installed my new usb mouse and keyboard(which started this whole mess - usb conflicts resolved and opted to reformat to clean out drivers, etc.). just plugged in the mouse/keyboard reformat and poof...magic...juli works...onboard works...spdif works. no more choppy stuttering ship explosions. no more crackling distortion destroying my beyers.
crazy problem i'd rather not see again cause i have no explanation for what fixed it. time to reach under the captain's bunk