Mike, I wanted to come back
Mike,
I wanted to come back and say the problem is resolved. Unfortunately I am not 100% sure if I know what fixed it. The reason I believe caused it is embarrassing I did not find this in the first place.
As discussed I waited for SP1. Installed. Can’t remember for sure, but I did not get the same audio error message, but still did get some sort of error when playing music. I opted to do a full reinstall of the Win7 OS. After that I still got the error. I tried something different. I have all my music, pictures etc on my second HDD. I decided to rip a new CD to My Music on my C: drive. It worked fine. Then I knew it was related to that folder on my secondary HDD. I dropped out of MC to have a look at the folder. When trying to open it it required Administrator access. The dialog stated it would only be required this once. I opened as administrator and all files looked fine. Reopened 7MC and the music now played with no error.
I am glad it is fixed, but sure is strange how the folder I created got its access rights changed. I hope this will help others in the future.