It's a problem in that you can't use the emulated sound card's mixer controls to change the volume. It should be near-trivial to make it actually audible with that caveat, however.
Yeah sure add another set of speakers to every driver and hook it up like we do in mame. But if you do that then nobody will actually fix the architectural. We've got plenty of technical debt, we don't need more.
I get a disk write error while trying to install a demo version of Sonic CD, when it tries to copy the final AVI file. So far the only successful installations have been Win95 itself, and DirectX 5 (from the FF7 install CD).
I couldn't reproduce it with the file you gave me. I think you'll have to provide the os chd & the config you were using.