I've managed to get the HD audio working much better now. I'll write a bit about this hoping it helps some one. I think the trick was to remove the connector from the Speaker pin, as others have reported. This Speaker pin is related to the beeps you hear, e.g. at bootup time. It is located in the very lower right corner of the mobo and it is on the top, left corner of the little box that is labeled beneath "Speaker, IDE, PWR, Reset, etc..". Typically there is a little wire from the case connected to this pin. The gentlest of forces will detach it (mine falls off easily, actually). If you detach from the wrong pin then various things will happen, such as the case's IDE activity light will not work or the PC won't respond to the power button.
Note in my case I actually did not have the Speaker pin connected to my case (which lacks a speaker), I just had a tiny pointless connector attached (Antec 900 Q-Connect). That was enough to cause a problem. I guess the connector extended the speaker pin with a long wire, and formed some kind of evil attenna.
I still hear a whine or crackle now and then, but it is negligible. Before, when copying files from USB thumb drives, it sounded like someone drilling into my ears. I removed my Soundblaster Live! since I am afraid of the airflow and thermal problems (on this board it has to be either right next to my power supply or right in front of my video card fan). I probably won't ever install the SB Live! unless I want to do some soundfont stuff.
I had another problem last night with flaky connectors (probably due to my frequent rearranging of the innards of the case). Some how, one SATA connector wasn't inserted into the disk tightly enough causing my Raid volume to fail. I fixed this easily. Then, as soon as I activated audio HD in the BIOS, I got an EMM386 memory manager crash before Windows XP could start. Removing and reattaching the audio HD connector fixed this. Then, only the right speaker would work. (Maybe I inserted the audio HD connector wrongly this second time, by one pin to the right). Reinserting the audio HD connector a third time fixed this. Everything works fine now.
An early attempt to fix my sound was to flash my BIOS to beta version 910. I think it's designed for the P5B deluxe w/ wifi (I only have the P5B deluxe) and it says I have a different chip (ICH08001R or something) now instead of ICH8. It seems to work though.