well this is certainly not normal behavior - if the card had developed for some reason bad output it would be audible regardless of OS
is there anything common between your systems? maybe there is something messing with the chip and it's control

If the card work well in DOS and not in Windows with another card loaded as well, there is some sort of conflict. I don't think you can mess with both mixer at the same time.
Also how are you routing audio output?
Directly to a mixer? I mean individually from each card?
Or are you connecting output from O2 to SbLive?

There is currently no other soundcard active. In this Fresh Install the Orpheus II LT is the only installed (physically and drivers) soundcard.

Maybe it's also an idea to test it the other way around. Do you have Hexen 2 for example? As it's extremely easy to reproduce the problem there. Set all volumes in windows to 100% and set the Hexen 2 volume to 100% and you will hear it clipping.
Then you can start decreasing volumes until this stops. Banging the sword against the wall stops clipping earlier, but it will then still clip if other sounds are active as well, as shown in the video.
With everything at 80% it is still terrible on my machine in battles, and the sound volume is what I consider as normal.

Regarding the used systems:
Mine is:
OS: Windows 98 SE
Board: SS7, ACORP 5ali61
CPU: AMD K6 II+ @600MHz
Graphics: Voodoo 3 3500 on AGP (+Currently also an Trio64 2 on PCI)

The other guy's is:
OS: Windows 98 SE
Board: SS7
CPU: AMD K6 III @630MHz
Graphics: Voodoo 4 4500 on AGP

Like YMF71x chips, the Crystal chips also have positive gain in the mixer levels, up to +12db which is 4x boost compared to normal 0db level. With the mixer sliders at max you are guaranteed to have clipping. I don't know where on the crystal mixer the 0db is, but for example on YMF71x chips in windows, 0db is the first notch from bottom, anything above adds gain (and thus increases noise too). EDIT: fixed typos...

So there are no other things to try? Are there any other ways to increase volume "internally" without touching any windows slider?