On the Bioshock shortcut, run in Windows XP (Service Pack 2) compatibility mode. The sound started working in stereo mode, you will know because when you click the opening menu options you will hear a piano notes sound (where you would not have otherwise). Oh yeah, it does crash farily often too.
Steps...
1) Right click on Bioshock shortcut, click Properties
2) Click the Compatibility tab
3) Tick "Run this program in compatability..." and select Windows Xp (SP 2)