woolly and echoey is what the effects do in most cases its a novelty,dont use them.
try updating your drivers click here
a soundcard will in most cases improve the quality.
small speakers usually do sound a bit tinny though and sometimes the subwoofer is not matched very well to the satellites so you get all high tones from them and wooly flabby bass from and underpowered sub with no midrange to speak off.
try hooking it up to a hi fi.