Ok I just went through this problem. After much trial and error I found out of all things Microsoft Internet Explorer was causing the problems. I downloaded an update to explorer the day before and the next day when I went to edit the Initialize audio froze up. What I did was remove Internet Explorer 8 and when I did it, explorer reverted back to Explorer 7 but I use Mozilla now anyway.
The drivers to sound cards were not the issue.
I edit on MC 2.8.1 and on XP.
My boss ran into the same problem but he did a system restore before the explorer update and it fixed the problem.
Hope that makes sense.
Ryan
Ryan McAfee
Moon Community Access Television
http://www.mca-tv.com