I would like to thank “vr_guy” for posting this on Reddit/r/Oculus…
“For the Realspace3D audio to work you must disable any third party surround sound software (Dolby digital live, DTS, Realtek enhancements) Stereo (2x speaker) mode only, headphones are required. Most of your typical USB 7.1 “Gaming Headphones” will not work with this properly. Cheap stereo Iphone headphones will work! If you still have issues.. I had luck by going into control panel, sound, properties of my sound device, enhancements tab, then add a check to the “disabe all sound effects” box.”
Hopefully, this will help any others that run into this problem.
-Rod