>>> my XP64 box

I'm using a cheap onboard soundchip, possibly this might have been a reason, see below..

> To be clear, this issue is peculiar to Windows XP 64

I didn't try installing BIAB on Win7 (and never will on Win8...) but I think that it's common for all 64bit Windows versions: Microsoft are sharing most of the code (some people swear that there is still 16bit code from Windows 3.x inside) between their versions and I din't see any differences between XP64 and Win7 concerning the handling of 32bit applications.

But anyway, the main point is not the OS but the driver setup procedure for the sound hardware: If the driver setup is not aware of the "specialities" of a 64bit system, it just puts the files into system32 but not into the folders for the 32bt sandbox.

It strongly depends of the sound hardware manufacuters. But maybe your setups could care about? :-)