This might be some interrupt/access thing or something like that. Anyway, if you click start -> run then type dxdiag to box, go to sound tab and take sound acceleration to lower setting does it help? I really don't remember if there was several settings in win98 for this but with some creative sound cards that had helped with similar sound issues.
How is your hard disk activity led, is it lit or blinking a lot or blinking almost none at all?
How about other games, do you have tested them and does sound work ok in those? In win98 there was little trouble with shared resources, so when gfx card and sound card shared resources it did quite weird things, but usually it did with all games using 3d graphics.
Also have you set adaptive distance setting in Planeshift? If not you can try that and report back if it made any change, that would help in diagnostics too.
