No audio processing on Cubase Essential 5

hi all,
I have a strange problem with Cubase Essential 5.1.1 since I reinstalled it. None of the audio processing works, e.g. gain, crossfade. All of those submenu selections just go thru the motions when you click on them, so they appear to be doing something for a few seconds, but then do nothing. There is no error message. It’s almost like Cubase thinks it’s working but the audio data doesn’t actually change at all.

It has never worked since I reinstalled Cubase. Worked fine before.

It’s running on Windows XP sp3, with an Audiophile 2496 pci card, which just receives a digital audio spdif signal from an external A/D converter (Burl).

Otherwise it seems to be working fine and I have been using it for about 5 months now, but the lack of audio processing is a real pain.