This seems very off base from my recollection and the state of tech availability at the time. The "analog hole" was around for long after the release of Vista, with Vista maintaining support for direct multi-channel analog audio out as well as VGA/component video out at HD resolutions, but that was not a hugely mainstream thing because going analog meant by definition non-perfect results - decoding a digital stream, sending analog, then re-encoding on capture. They started laying the groundwork, but 2007 PCs and laptops didn't commonly have digital output, so playing a DVD over VGA, for instance, was extremely common still and allowed.

And beyond that, this is the first I'm seeing a claim that "doing 3d audio calculations" was restricted and that this had anything to do with intercepting pre-encoded multi-channel DVD/digital media streams. They seem completely separate from each other as far as technical pipelines go.

Sound cards as a general consumer product were dead long before Vista. The last hurrah I remember was the SBLive!/Turtle Beach Santa Cruz era 1998-2001 stuff, Vista didn't come out until 2007 (Longhorn was famously botched, etc...).

CPUs just got fast enough that all of that, including 3d calcs, could be done better on common CPU by the mid-2000s. Do it on a sound card, you have to buy a new sound card to get improvements. Do it directly in the OS or in-game, and you can benefit from improvements from the OS or library or game devs immediately.