It wasn't their solution exactly, but some of the things they suggested led me to it. They recommended various things:
re-installing ALchemy from CD, re-downloading latest drivers, trying the card in a new system.
What I did:
Insert CD, go to "install" but instead "repair" ALchemy.
However, I'm sorry to say, this did not last long. After a short while, I now have 2 more issues:
1) No sound at all, everything under options/sound is greyed out and I can't check/uncheck anything (disable sound is checked).
2) ALchemy won't start at all. If I double click it, nothing happens. Checked the task manager, it doesn't even appear briefly.
If anyone knows the solution to 1), I'd love to hear it. I didn't do anything to my settings other than repair ALchemy, and the problem didn't start right after that anyway. ›››
EAX (Environmental Audio eXtension) Is a Sound Process API for Direct X Direct Sound etc. So it is like Direct X 7, DX 5.1, OpenGL etc. Creative put specific hardware on the SB LIve, Audigy and X-Fi cards to take advantage this to be able to process more channels at once.
THE DOWN SIDE... If Audio Engineers and Game Desigers dont support the API then its useless (Just like DirectX now with pixel shading and VGA cards with Pixel Pipelines and 64bit CPU without 64 bit programs). No game in Windows 7 can use EAX without the installation of Alchemy, even if the game reports it can use it, EAX cannot work without it. So yes; in short - install Alchemy for every game you intend to use EAX with.
The reason behind this is the exclusion of DirectSound and DirectSound3D from Windows 7. Alchemy is needed to "emulate" the DirectSound through OpenAL to achieve a similar result.