You should set your audio interface to: primary sound driver or Speaker (Realtek HD Audio). Not the Digital Output !!
Does the audio work in other applications? (ie. Windows mediaplayer/VLC/Winamp?)
If so, the drivers should be ok, and I see no reason why Avenue won't play audio (especially with the democlips it should just work out of the box).
As goto10 said... You have to use .wav files to load in Avenue. MP3 or other compressed formats won't work, or even show up in Avenue's browser (afaik)
You could try installing ASIO4all
and see if this works. It's free!
desktop: Windows 7 home premium 64 bit, MSI 870A-G54, AMD Phenom II X4 955 Black Edition, 4Gb RAM (GVP34GB1600C9DC), NVidia GTX 560
laptop: Windows 7 home premium 32 bit, Core2duo 2Ghz, 4Gb Ram, NVidia 9600m GT