Grrrrrrrr!!!!!!
After several days of emails going back and forth to Microsoft, giving me steps to follow that I already told them I have done, their verdict is:
"since this the C-Media driver from Asus is for Vista RTM instead of the SP1, maybe the driver does not apply to this version. In order for a device to function on a specific Operating System, the proper driver should be installed. The driver provides an interface for communication between the hardware and the system. Without the appropriate driver, the device will not be recognized or work properly in Windows Vista SP1. Thank you for your understanding.
At this situation, I suggest that you contact the Asus Support first, please check if there is an updated C-Media driver for Vista SP1. For your reference, I have included the contact information below:"
Or, in one sentence: 'It's not our fault Asus haven't updated the driver for our new service pack.'
I'm sooooo ******* frustrated with Microsoft and Vista. I really wanted to love Vista, but I couldn't hate an OS more!