How can the "Audio" be disabled as per user settings when I can hear them perfectly well via the PMDG aircraft - I have Windows 7 64bit. . .
Fact that you hear audio in other application, doesn't mean your audio device will surely work with GSX. GSX uses OpenAL for sound so, if your audio device or audio drivers have issues with it, you will hear sounds, but not from GSX.
Of course, this assume you have selected the correct audio device in GSX. Your log shows you have disabled it. To undo all your changes, try to remove this file (when the sim is not running):
%APPDATA%\Virtuali\Couatladdons.INI
Then reinstall GSX.