Thanks a lot for the responses guys. I realized I haven't given you enough information, sorry about the omission.
I first installed the drivers from https://www.vogonsdrivers.com/getfile.php?fil … 130&menustate=0 by running the installer, no shortcut/easy methods involved. It installed DirectX 9 and WDM driver. After reboots, I switched to VxD driver using Creative's Driver Utility Program in the start menu.
I also did a similar installation with the modified drivers from https://www.vogonsdrivers.com/getfile.php?fil … 169&menustate=0 and in another attempt followed the corresponding guide MattRocks also linked to Guide: Installing Windows 9x and DOS drivers on Audigy cards (version 3.1)
If NeoG_ is right that this all comes down to something being wrong with the PCI slots #2-#5, I'm not sure if there's anything I can do about it. To test it, maybe I can get an AGP card and install the Audigy in PCI slot #1.
I do have Windows 98SE installed.
Coming back to what actually is happening with VxD, this doesn't sound like a CPU bottleneck. When Windows starts, I heard the opening music from the Plus! theme, and it plays perfectly fine. I right click on the desktop, and I heard the sound associated with it perfectly again. I right-click again, and no sound this time, or in any following attempts. However in about 30secs to 1 min, the sounds play randomly and repeatedly. And I also hear static-like noise from time to time.
When I play something in Winamp, it plays flawlessly. However, I still get additional static-like noise and rarely crackling sounds from time to time, and Windows sounds still play randomly.
With WDM, there is no sound at all.