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This is the Audio Device Graph Isolation service, a part of Vista and 7's audio services. The real audiodg.exe is harmless, but like any file it could be infected. If it's not doing anything, it should be fine. The worst that can happen by ending it is your audio goes out, restarting your computer would fix that.
Audio Device Technologies. This section contains information about audio device technologies such as Universal Audio Architecture (UAA) and High Definition Audio (HD Audio). Default Audio Endpoint Selection in Windows 7. Describes how the Windows 7 audio subsystem selects the default audio endpoint.