I was just messing with it again and decided to take the Virtual Audio Cables out of the picture and point winamp directly to a sound card output and guess what, it was fine.
Cool....well sort of. Sorry I can't help you with the VAC stuff, except for trying to run it without the KX drivers (though without some sound drivers installed, I don't know if this can be done). If you could do that it will help determine if there is some conflict between VAC and KX, which then you'd most likely have to get the developers involved...then they would have to feel inclined to work together for a fix...well you know where I'm going with that.
Too bad Scalt isn't around so much, he may be able to help you along the way concerning VAC. He has even a little repor with the developer.