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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.
Snagit (Windows): Troubleshooting Audio. Problem. When recording with Snagit, I am experiencing one or more of the following: Audio has an echo effect. Distorted audio. Unable to start system audio error. Unable to initialize audio error.