As Collector said, you probably had a better experience, if you would have tried different output methods. As I told in an earlier post, I get the best results with DDRAW and experience the same sluggish gameplay with OVERLAY.

I've did try this too. I've checked forum first before asking here, saw post about =>ddraw. Tried. Nothing. Just not my day probably.
But whatever, already finished Chapter1 of GK2 =)

What seemed to help me with sound (not completely, but it does seem to stutter only rarely) was changing rate in [mixer] group to 24000 from 22050. My soundcard has native sample rate of 48000 and it had to do nontrivial resampling with 22050, whereas it can play natively with 24000 rate.