The configuration program's Direct 3D test can have a problem with (most often) some Radeon cards / drivers, but the game itself should work fine. Select Direct 3D, then check the 'skip test' box and click on the 'test' and 'apply & close' buttons.
The 'Use AlphaBit' option presumably uses a more compatible, though probably slower, rendering technique. The readme file lists some problems this option helps with, but if you are not encountering any graphics problems, there is not much reason to think it would help (selecting that option to test it shouldn't hurt, though).
For the sound distortions, you could try turning the hardware sound acceleration down (click Start | Run, type in dxdiag and hit enter, then switch to the sound tab).