i had the exact same problem as you guys (without the sound dissapearing) i had "Return to castle wolfenstein: enemy territory" and "The Sims 2" on my computer both of which worked fine untill service pack 2 was installed. i would try uninstalling Sp2, and re-download directx 9c at the previously specified location. Then reinstalling your video drivers, after i did this the sims2 was purring along just fine. hope it helps
im thinking that it has something to do with the video card/drivers being incompatible or touchy with service pack 2 because it seems many people are having this same problem.