Just in case anyone comes across the same issue, I managed to fix it by going into the 'C:\ProgramData\Running with rifles' folder(on Vista) and editing the line in config.xml to say:

<audiodevice value="1" />

For some reason it kept going back to 0 every time I applied changes to the settings. Also don't make the same mistake I did and look for Program Files instead of ProgramData.

This might work reverse for some, or not at all, I dunno. I didn't write the code after all! This is just how I fixed it.

(Perhaps it'd be neat to have a setting that allows you to pick an audio device if another doesn't work?)

Just adding that there will be a fix for this in the upcoming 0.55.

The beta demo 0.4 does suffer from it though, I'll try to find the time to update it as well soonish.