I would be inclined to believe that the internal sound chip has a lot to do with the problem.
You would likely do much better with even a Soundblaster Live than an internal chip. The internal chip is much more susceptible to interference from the mobo and it electronics.
One of my older machines (PIII 933 w/512 RAM and GeForce FX5200 Ultra) has a SB Live. The machine has multiple PCI cards (SB Live, NIC, FireWire and 56k Modem) and I have no issues playing mp3's. Grated, the machine has two drives in it, but it has no problems with audio files that are on the OS drive.
Before condemning the internal sound you could run
dskBench to check your drives throughput.
You could also check into your
PCI Latency and see if that helps any.
It may also be possible that the internal sound is sharing an IRQ with the video (lowering the FX5200's PCI Latency may help if that is the case) and depending on the OS that you are using , you may not be able to do anything about that. Short of buying a new soundcard, which you may want to consider anyway seeing as how you can get a much better one for relatively cheap.
HTH
-Ken
-Edit to add- Make sure DMA is enabled. If you don't know how to check this,
here are some search results that should help.