Wow-- thanks for all the help! Unfortunately, I've spent several hours and made zero progress.
I recreated my SheepShaver setup from scratch with System 9.0, a retail disk image at Macintosh Garden. I re-unpacked the ST disk images, and re-installed Starship Titanic. I allowed QT3 to install. Same audio problems as before. Mine also seems to be breaking up now and then because of the extreme level. I'm unable to change the volume level. I have enabled "Built-in" in the Sound control panel. But any changes to the level just result in the control snapping back to maximum. Oddly, I seem to be able to change the level for system alerts.
I don't have Apple Audio Extension, but I have an extension called Sound Manager. I unchecked that. After the ST installation, I had another version of Sound Manager. I tried to uncheck both, but the change did not persist. So when it asked, I told it to delete one of them. So I now seem to have the original Mac OS 9.0 Sound Manager extension, although unchecked. I'm frustrated because the sound was a big part of my enjoyment of this game.
After deleting the Sound Manager that ST installed, I can no longer start the game. I get an alert saying that SoundLib--soundConverterSetInfo could not be found. This is after saying "Delete" to the second Sound Manager. A little comedy: The voice speaking the alert prefaced the message with "It's not my fault--".
So I just uninstalled ST and re-installed it again. It plays, but not with clean audio. I wonder what I may be missing.
I wonder if there could be something odd about my installation, since we now have two reports of good audio. I've now tried two different Mac OS 9 install disks. I've tried ST with and without the QuickTime 3 install. I tried removing the Sound and Control Panel preferences. I have the Sound Manager extension disabled. In my SheepShaver preferences, I have left unchecked the box "Disable Audio Output", and the devices listed are /dev/dsp and /dev/mixer.
Any ideas? I very much appreciate all the help you've given!