Can you leave the nVidia audio driver out and install the Realtek from the CD?
What CD drive do you have and what interface - IDE/SATA? Do you have multiple optical drives?
Did your XP installation go smoothly? Which nVidia drivers are you using? Is XP running normally except for audio?
What happens when you go to Device Manager, select DVD/CD-ROM Drives, double click the CD drive, click Troubleshoot and follow the procedure?
Try inserting an audio CD and then run Realtek's AVrack. This should bring up a list of songs on the CD. What happens if you try to play a song using AVrack?