Does running at half sample rate bother you that much? Most games won't be terribly affected by it. Over 99% of games use mono sound and one or 2 tiny speakers. If running at half sample rate fixes the problem for you, then I would think that the only real problem would be learning to live with an acceptable solution.
I can't imagine what your problem would be for such a nice machine. Make sure you turn off any fancy sound options for your audio card like fancy speaker array configurations. You don't need them. In fact, I would remove all the software that came with the sound card and just keep the drivers.
The only hole I can see in your setup is Win98. It's not the best at handling resources. Is there any particular reason you chose that OS? For a PC of that caliber I think WinXP would be a lear choice for an OS. If you do decide to keep that OS I would first suggest removing half the RAM. Win98 seems to actually slow down iff it has TOO much RAM in it. (I've experienced it myself as have others on this board.)