OK. Here's the latest.
I updated the Alsa to ver. 1.0.18a.
The update went smoothly with no errors of any kind.
I tried playing a movie after the update but the sound behaved the same. I then decided to take a peak at the Alsa mixer. I opened that and every thing seems correct, nothing muted etc. So I tried to play the movie again after exiting the alsa mixer, and to my big surprise, suddenly every thing was playing correctly.
I then went on testing some other files and here's the deal up to now: a DolbyDigital avi plays fine, a DTS disc rip plays fine, a 1080p mkv sounds crappy, sara sounds crappy, any audio file sounds crappy and that's all I tried so far.
It seems weird to me that some stuff plays well and some doesn't but I haven't had the time to continue checking.
Any ideas any one ?