Hmmmm, this is weird... here are some new issues I'm encountering:
-At the start of the layout I loaded two .wav files. I tried it loading each from separate Xaudio2 objects. I had one on channel 1, the other on channel 2. I also tried it loading both .wav files from the Xaudio2 object and also putting both files on the same channel... I used "play channel" to play the .wav's.
... the result in both situations... a very nasty, loud, garbled electronic sound from one of the files, and the other file playing normally. Very, very strange. It's basically a situation where I'm not able to play more than one sound file at a time.
-I also attempted to load an MP3 at the start of layout, and then "play channel" to play the file. But, the file doesn't play. If I select "play music from file" it plays but causes the layout to pause. In fact, If I choose "play music from file" with .wav's it does the same thing. All of this happens even after loading the file at the start of the layout.