According to the system specs from the Dell website your computer has a built-in headphones jack on the front panel. See if it does the same thing when you plug in a pair of headphones in the front.
I doubt it but maybe look at your soundcard's control panel and see maybe if it's some kind of weird effects setting. Also look to see if you can update/reinstall your audio card drivers.
Unfortunately it continues to look more like your audio processor has gotten frickizied (especially since you said WMP is doing the same thing.)
If that computer is still in under warranty then you might wanna get Dell on the phone and see if they can help. I doubt it though since it seems to only have come with a paltry 512 MB of ram and would indicate it's an older machine. If it's out of warranty but you want to try to continue to use it then I might suggest finding a super cheap or used PCI Soundcard to replace the fried one. I would also suggest seeing if you can cheaply upgrade your ram to 1 G or maybe even 2 G if it can handle it, but again, only if you're willing to salvage it if it is out of warranty and you can do it cheaply.
If you're not comfortable with doing these suggestions yourself then I would advise you take your computer in to a local computer repair outlet.