AC97 is fairly nasty (but then again, I'm an audio engineer in my spare time!). Disable it and replace with Creative or Turtle Beach, as brendanhedges has done!
For general game playing, it's ish - but you should manage to get non scratchy sound using 22 or 44.1KHz stereo.
Check the wiring on your speakers - replace the cable (if you can!). If different speakers/speaker cables don't solve the scratchiness, it could be the connector on the mobo.
Which mobo are you running?
Good Luck!