I recall a similar problem on a Debian system once, with my Audiophile
2496 (same chipset). I think I resolved it simply by installing
alsa-tools-gui and using the Envy24 Control mixer. It may have been a
matter of the correct volume controls not showing in the alsa mixers.
Although the Envy24 Control mixer did not seem to function completely
logically, I did manage to get satisfactory stereo output.