Microsoft made dramatic changes to how sound drivers worked that caused problems for SoundBlaster's advanced features, but the explanation at the time was that

Microsoft made dramatic changes to how sound drivers worked that caused problems for SoundBlaster's advanced features, but the explanation at the time was that SoundBlaster's garbage drivers were responsible for a sizeable portion of Windows' BSODs, and redesigning the driver model was a critical part of making the OS stable. I've never seen a reason to doubt that narrative. Overlay mode wasn't a CRT feature, and worked fine with flat panel displays with XP. The introduction of GPU compositing in Vista was what killed it, but it still continued to work in 7 if you turned compositing off. The death of funky resolutions was entirely a result of switching to hardware which has a native resolution, and not anything software side.