I solved this issue. In MC I kept bitstreaming to none and in DSP studio>Output Format>Sample Rate I set 352,800 Hz to output at 176,400 Hz (it was set to playback 352,800Hz at 96,000Hz). I guess 352,800 is not an exact multiple of 96,000 and this was causing the issue. Now playback is perfect and no more white noise after 30 seconds or so. I don't know why the bitstreaming doesn't work but I don't really care as prefer PCM being sent to the processor anyway as this gives me more flexibility with surround modes as I only have a centre back speaker and no rear surrounds (4.1).
To be honest it was MC that discovered this. I unticked "Output Format" altogether and tried to play the file and MC said that playback would not work unless it made the above change and asked me if I wanted to do this.
Thanks to everyone for helping me to understand the complexities of this file format.
EDIT: No this is not solved. Songs are still reverting to loud white noise after 30 - 60 seconds of playback. Now its not all songs. Perhaps it is corrupt files.