I have your solution:
I was having this same exact problem, where my milkdrop worked fine, then all of a sudden wouldn't work no matter what settings I changed, even after reinstalling, milkdrop, winamp, even graphics and sound drivers. After a few weeks of searching for help online (and not getting any), I found the solution.
The problem is with the Athlon 64 NX bit. I am also running an A64, system with about the same hardware that you have. Service pack 2 enabled the NX (no-excecute) bit, which is supposed to be a security feature against buffer overflow exploits.
Anyway, in windows XP, just go to control panel, system properties, advanced tab. Then click on performance settings.
In the new window go to the Data Execution Protection tab. Then click "add", and browse to your winamp directory, and select winamp.exe (make sure it is checked in the list after you do). Make sure winamp is closed, then click apply and then OK.
After you are done with that, your milkdrop should work with no problems!