Ok, after 2hrs of troubleshooting this, It apparently is my Creative Lab Sound Blaster SE card/drivers causing it. I used my motherboard built in sound and it works fine. I remembered I had this problem before with Torque Game Engine 1.5, years ago. They used an openAL to fix the problem.
Hope this info might help.
Mark
Windows 8.1 64 bit, Intel core 2 Duo CPU E8500 @3.16 GHz 3.16 GHz, 4 GB DDR2-800 PC6400 MEM, NVIDIA GeForce 9800GT 1 GB, Creative Labs Sound Blaster Audigy SE.