A lot of people have been having success with changing their audio settings from Quadraphonic or 5.1 Surround to Desktop Stereo (Control Panel->Sound and Audio, then click the Audio Tab, and then Advanced under your sound playback). It worked for me, but even then it lags up quite a bit until I actually use the /nosound startup value (right click your Demigod Shortcut and in the Target value, add /nosound after the quotes)
not the best workaround since it leaves you without sound, but its better than nothing. hope that helps