Hello @0XIDE :
I also ran into this problem on a Windows XP MCE installation on Workstation 17.x and performed all the steps you did to no avail. Nothing worked, including VMAudioFixTray, SetTimerService, or changing the Hardware Compatibility level to a lower level.
However, I did run into a thread that indicated someone was able to get it to work on Workstation 15.5 or older. I tried a new installation of XP on my other Workstation 15.5.7 machine, and after utilizing SetTimerService, the sound distortion was no longer there. This corrected the problem.
For the purpose of testing, I took a snapshot of the working virtual machine and then copied it into the Workstation 17.x host, and the problem resurfaced. That is, a perfectly working VM XP installation on Workstation 15.5.7 with no sound distortion, stopped working when run on a Workstation 17.x host.
