|It seemingly worked.|
Before I did anything else I pulled out a stick of 1gb of RAM leaving me with just 3gb installed. The distortion issues vanished.
I read up a bit on PAE though, it might be of interest to some people; but on all 32bit Windows OS's above Windows 2000, PAE is turned on by default when DEP is switched on (Data Execution prevention). I didn't realise that. it means that PAE was on even when I had only 2gb of RAM, I obviously just never noticed it (because in server 2003 DEP defaults to being switched on).
It would appear however that sound distortion only occurs when 4gb of RAM is installed and PAE is switched on. PAE can be switched off, normally you use the /NOPAE switch in the boot.ini. I tried this but it didn't seem to work; that was until I found out that in Windows Server 2003 (SP1 or above), PAE is essentially "stuck" on until DEP is switched off, unlike other Windows versions putting NOPAE in the boot.ini won't turn it off when DEP is on. Must be some kind of dependency between the two on Server 2003.
I never really use DEP - and it only ever seemed to cause a couple of games I have to stop working, so I figured I'd turn it off using the /execute command, then put in /NOPAE. This worked. I plugged the 1gb of RAM back into my system. Now under system properties it reads me as only having 3.25gb of RAM but, I kind of expected this anyway.
However, it would seem after a bit of testing, that the sound distortion has still not reared its ugly head. Not only that but now Hibernate has reappeared in the power options control panel.