If you have a headphone preamp or a digital -> analog converter, try testing with the TOSLINK port. It should be near the top of the back of your computer next to the PS2 port; looks like this:
Otherwise, the problem is probably with your sound card.
-dxlevel 98 in your startup parameters. If you have an integrated graphics card, it may be taking priority on your game -- you'll have to use the NVidia/AMD control panel to select the proper one for each game.
In the future, you can also add -heapsize <bytes> to your startup flags to allocate more memory for Source. Not sure if Lua in GMod is setup to use it or not.
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