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Ok heres the info, but I got it workingo n my own! Using Dosshel I simply ran soundtest.exe in the theme hospital directory and sound works fine, but I still cant get the save working.

1. Motherboard - MSI P55-GD65
2. Processor type and speed - Core i7 860
3. Amount and type of RAM 4 GB g.Skill Ripjaws
4. Video board w/ RAM amount and type - Sapphire 4890 Vapor X
5. Sound board - Onboard(Realktek)
6. Operating system - Win 7 x64
7. Game name (and version, if applicable) - Theme Hospital
8. Description of problem (be detailed: saying "it's jerky" doesn't help, saying "the player sprites seem to be jerky when I'm pressing any of the arrow keys" does) - No Sound.
9. Reproducibility of problem (always, only once, always but only on a specific level, etc.) - Always
10. Sound mode used - Not sure
11. Video mode (Software, OpenGL, Direct3D, or Glide, and resolution) - Not sure
12. Version of emulator (for VDMSound, probably 2.0.4 or 2.1.0; for DOSBox, 0.58+) - DOSBox 0.74
13. Steps already attempted to solve the problem (please say you've read the README if you haven't, and READ IT IF YOU HAVEN'T!) - Yes I read the readme.txt but Im not used to all this mounting stuff and when I try, I have limited to no success.

To save I have put this in the dosbox conf:

1[autoexec]
2# Lines in this section will be run at startup.
3# You can put your MOUNT lines here.
4
5mount C "C:\dosbox" 

Then I edited the config file for TH to save to:
SAVE_OVERRIDE=C:\dosbox
But when I try to save in game, it says it is unable to save. How Can i fix this?

EDIT: I think DosShell may be the issue. If I tell DosShel to mount on any other drive then C, I can launch the game, but if DosShell is mounting to C then it launches dosbox but crashes rather then starting the game.

Then I edited the config file for TH to save to:
SAVE_OVERRIDE=C:\dosbox
But when I try to save in game, it says it is unable to save. How Can i fix this?

Don't do that. c:\dosbox\ becomes c:, so from the perspective of the programs running in dosbox there is no c:\dosbox\.

So hows a good way to go about it? Ideally I would like to save it to C:\Program Files (x86)\Bullfrog\Theme Hospital if possible but C:\dosbox will do if I have to.

I have no idea where you installed Theme Hospital to, but you don't need to edit any Theme Hospital config files. Theme Hospital puts the savegames under the SAVE directory under where ever you installed it to.

Just mount some directory to C: and the cd-rom to D:, run the installer from D: in dosbox (I think the sound setup is part of the installer - if not, run the sound setup afterwards), then run hospital.exe in the directory where you installed it to.

follow the guide
60 seconds guide to getting your game to run in DOSBox