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This problem had plagued me for so many years. It turns out it wasn't a game problem but a DirectX problem.

Problem: The foreground sound is 10x louder than the background sound, especially when the wizard is casting a spell, especially when running on a laptop, especially when running in Windows XP.

Cause: Bad/incompatible DirectX version. Basically, the good versions of DirectX that don't cause this problem is to install DirectX Feb 2007 Redist followed by DirectX Jun 2010 Redist (install them in this order). But, you must first trick the computer into thinking you have an old version of DirectX. Otherwise these two might not install. Open regedit, navigate to HKLM\Software\Microsoft\DirectX and change version 4.09.x.x to 4.08.x.x. Reinstall DirectX Feb 2007 Redist followed by Jun 2010 Redist and the sound problem will go away.