XP Error Message to Reset Advanced Sound Effects for Gaming

[Mihivires]

Need suggestions.
Windows XP Home SP1
HP Pavillion
AMD2400+, 2.00 GHZ 448 of RAM

I get this error message at boot up & when I access the control panel:
"To enable the advanced sound effects for gaming please make sure the setting of the hardware acceleration is full. The directory is as follows....."

Booted up this a.m. Got screen that said Widnows failed to load due to recent installlation or improper shut down.
As the last user I know system was shut down properly. Only update was to Adobe 7.0.

When I selected Last known good, unit froze. So I hard booted.
Got the message again so I chose to start windows normally.

My taskbar changed to tan and looked like something from W95 (XP theme's gone).

I tried to do a restore, FAILED.

I did a scan with SPYBOT & AVG Free. Nothing amiss turned up.

Did some updates with Microsoft and got my XP theme's back; however, I still get the error message listed above.

I have accessed Device Manager and there are no flags on anything.

I have even checked the settings as directed in the error message, everything is fine.

I have done a search on the net and cant find a single article pertaining to this problem (which I find very odd).

I get denied access when I try to update the driver (Realtek AC97 audio)

Can anyone give me a suggestion on what I need to do?