1) I have now installed PM123_1-43.exe. Don`t know where I got it from and if it is the latest version (looks like I got it from Hobbes)
2) I plugged in a USB audio class 1.0 device (I DO NOT mean a USB 1.x device), I switched the default audio device to the USB audio class 1.0 driver
3) I played an audio cd: that worked right away, no oddities, volume control works
4) I then loaded an .MP3 file: plays just fine, no hiccups, no hops backwards, whatever, volume control works, either with the global volume control or with the enabled PM123 equalizer pre-amp volume control
5) selected an ADPCM encoded .WAV file: plays just fine (but only if you have USBWAV installed because that transforms from ADPCM to PCM via the MMOS2 supplied filter functionality), global volume control works, PM123 equalizer pre-amp control also works
6) I then selected a PCM encoded .WAV file: plays just fine, volume control works either way
When I play a sound, no matter what sound material, things get problematic if you use the WPS to open a USB drive or if you use NDFS to access an FTP folder via the WPS while the replay takes place. As I mentioned already, the WPS is such a lousy piece of SW (at least in conjunction with SMP, I remember that the problems with the WPS were only minor for as long as we all possessed single-core CPUs) that it will massively block various threads in the system, seemingly also the threads that DART and/or the MMOS2 streaming manager create to manage the sound replay (feed audio data to the device driver, issue user callbacks to receive events to feed more data to the MMOS2 subsystem).
So, if you want to listen to music on an OS/2 system, do not touch and use the system while listening.
I you could provide me with a sound file that leads to what you are describing, feel free to attach them here and I will give it a try.
Under OS/2, I do not use USB 3.x (that is, I do have USB 3.x hardware but I have no USB driver loaded to support it). All USB audio devices, regardless if class 1 (USBAUDIO.SYS) or class 2 (USBAUD2.SYS) only use USB 1.x or USB 2.x. I think the ONLY USB HW that profits from USB 3.x is Flash memory sticks/HDDs and maybe USB network devices (the latter not being supported by OS/2 anyway, except for a few).
Therefore, as a test, I suggest that you comment out USBXHCD.SYS in your config.sys UNLESS you have USB 3.x only ports. In the latter case you are out of luck and would need to buy a USB 2.x plug-in PCI card and plug your USB audio device into that.