And we have a winner!!! The addition of the ReserveCache option (set to the default of 180) completely eliminated both the quick Ws and the long Ws / audio glitches. Thanks!!! Now, why would the absense of this value cause problems...???

config.ini (before and after with [labels])
empeg:/empeg/bin# diff /drive0/install/config.ini /drive0/var/config.ini
[Startup]
> ReserveCache=180
[display]
< caching=0
> caching=1
[hijack]
> spindown_seconds=60

boot log fragments (after - see earlier in the thread for before):

Memory: 47452k/48M available (984k code, 20k reserved, 692k data, 4k init)
Using non-standard cache size 434 (bonus 32Mb, adjustment 180)

Edit: As a final test, I reverted all other changes out (drive status display and spindown timer). The player is still working perfectly! There is something about not having that ReserveCache line that is triggering glitching... Interesting!