I apologize I've been really busy.
If so, does this imply that the AGI interpreter is using software to manipulate the volume envelope?
Yes, as has already been said, this is the case. The SN76489 (and others in the family) just aren't complex enough to have settings for volume envelopes. It just generates the tones at the requested level and duration and that's it. The envelopes are all handled in software. In fact, among the Sierra tools that were leaked semi-recently there's one for the Tandy driver for SCI games that was used to create Tandy patch files that were solely meant for creating custom volume envelopes for each channel per game.
@MusicallyInspired, do the tone channels now sound closer to what you would expect? I have now implemented the dissolve logic. To me, it sounds a lot better in some of the games I have tried, e.g. KQ4 and BC. I haven't yet changed anything with the noise channel, so in SQ2, the broom noises are still being cut short for some reason. It makes me wonder whether there is a general "cutting short" issue with sounds. I'll probably start looking into this now.
This build also has the various fixes for the AGI Demo 2 that you identified.
One thing I noticed right away is it forces me to uninstall the previous version before installing the new one. I kind of wish it would just install right on top of it or at least offer a way to automatically uninstall it before installing instead of having to bring up Control Panel->Add/Remove Programs manually. I tried to install it to one of my additional hard drives but it complains about not having permission to write there (even though it creates the folder just fine) which forces me to run the installer as admin. But these are small gripes, especially for a beta.
That said, yes the sound is great! But unfortunately, while watching the SQ2 demo in AGI Demo Pack 1, the sound resources overlap. When Vohaul shows up on the screen the the SQ2 theme is still playing and doesn't stop. Then on the next screen the hovercraft sound overlaps with itself. And then that overlaps with the next screen, and the final short tune at the end. Basically sounds aren't stopping when they're supposed to somehow along the lines.
And yeah, the broom sound effect seems to be truncated. It does sound like a noise channel sound and not a tone like I previously erroneously thought.