I recently noticed that if I'm listening to music while doing work in after effects or photoshop the sound starts to get glitchy and slow down. I'm using on board audio and my drivers appear to be up to date. Should I just bite the bullet and buy a new soundcard?

System probably just doesn't have enough power to multitask like that.

Except it does.

Windows 7 64Bit
Intel Core 2 Duo @ 3.00GHZ
4GB Ram

It's happening now and I'm not really doing much. I have Chrome, itunes, mirc, digsby, and After effects running. AE is using about 690,000K RAMZ, however the glitchy noises only seem to happen under CPU spikes... hm hm hm

Also, I suppose I could just purge the Image Cache and video memory occasionally...

My laptop, and computer before I had a dedicated sound card, tended to behave like this during hard disk writes. Onboard sound can really suck.

Well to clear up the issue while using After Effects, I enabled a disk cache as well as the live preview settings. I'm also periodically purging the Undo / Image / Video / Snapshot caches. I still can hear a little bit of the glitching but it's not quite as bad now. Would buying a new soundcard alleviate this?

Given that you seem to have identified the problem is CPU load? I doubt it.

Raise the process priority of the media player to Above Normal*. Microsoft has a Vista-and-up service which exists specifically to boost priority of media players but I bet it's "opt in" (and/or shim-based detection, if that's possible) thus giving WiMP a home-field advantage...

* - Given you are using iTunes which eats all the CPU WHILE IDLE in my experience, it isn't surprising that you have CPU load problems. Thus setting it to Above Normal may very well make your computer explode.

Try foobar or Winamp. Please.

I'll give it a shot. Winamps UI started to annoy me >_>

As for the Cache thing... It might just be that my project isnt a monster anymore

I think in Winamp you can set a buffer in the output plugin. I haven't used it since the 2.x days so I don't know if it's still that way.