I installed the driver link you posted. I reset all sound settings to standard. I checked Creative for an updated driver, but did not find one.
To me it seems like that the landscapes were never installed. Do I have a defective CD? Do I need the first IL2: Sturmovik even though FB says it's a standalone?
I can't explain why you're having this problem, but doubt its a defective disc. Defective discs fail at some point in the installation process. You do not need the original il2.
I've messed around with the game a bit more and still no luck. Would anyone know what I can do to fix this or point me to someone who does?
I think I'd be formatting C and then reinstalling Windows 98, unless you can lay your hand on a copy of XP and SP1. Make sure you have all the relevant drivers at hand before you start.
Without wanting to put him on a pedestal, SteveV is one of the main guys we turn to for diagnosing problems and his advice is very well-researched and sound. You're unlikely to find better.
Good luck and googling,