Hey I've finally got this to work on my system.
1. Remove and reinstall X-fi software afresh from retail CD.
2. Set to Game mode.
3. Log onto creative support and install the software autoupdater.
4. Let it search and find that an update is available.
5. Download
6. Install
7. Reboot
It now works fine.
I've tried unistalling the x-fi software and installing the update manually several times before but that didn't work for me but when the autoupdater did it itself it now works fine.
Stupid I know but it works now.
Didnt have to mess with the filtering settings etc. as they're all set to app. controlled on my machine.