GageBlackwood: One of our programmers looked into this. Because this version of Pegasus Prime is based on the ScummVM engine, the audio problem may be related to sound card driver compatibility with ScummVM. Here is more information on this from
ScummVM FAQ #16-17:
http://www.scummvm.org/faq/#5_16 Same problem and this solution didn't work for me either. I would further note that I've not had this problem with any other games in ScummVM. I even tried running the game in VirtualBox with Windows XP, as opposed to Windows 7, and a different sound card and the sound popping/distortion still occured.
Is this issue being looked into on your end?