This isn't just an obsidian problem, I have played quite a few unreal engine based games and prety much all of them have an issue detecting sound hardware.
Thats how I knew about the fix, had the same issue wiyh both mass effects.
I can confirm that for me it seems ok, yes maybe some bullet sounds are a bit dodgy, but I am getting sound out of all 7 speakers and the sub. And not just stereo upmixed to surround, I can hear people coming from different directions, but I will agree it isn't perfect.
My log files don;t show anything but, log started, logged stopped after about 1 second, for mass effect you could see that the sound was correct by checking the logs. or at least that your sound card was being detected correctly. Anyone know what setting needs changing to enable full logging like in mass effect? ideally the logs would say, detecting openal audio device, or using software sound.
If you have a creative card, try using alchemy, I gave it a shot, just to see, and it definatly does something to the game, it got very (overly) echoey .
also play with the settings under the alaudio heading, they may cure some of your issues.
I have also played alot of hours since using this fix, and i have had no crashes.
Don't see why software isn't in surround thugh, plenty of other games support this.