A default installation of Windows 2003 in Virtual PC does not install drivers for the virtual SoundBlaster. Here is how you can enable your SoundBlaster:
Copy "wdma_ctl.inf" and "ctlsb16.sys" from Windows XP to a folder.
I found the file "wdma_ctl.inf" in the "Windows\inf" folder. The file "ctlsb16.sys" was located inside the file "I386\driver.cab" on my installation cd (or here).
In device manager select SoundBlaster 16 and click Update driver. Browse to the folder and install the driver.
After restarting go to the controlpanel "Sound" to enable the audio service.