Well, I spoke too soon. While the game seems to have less hitching than before, I am now experiencing complete system freezes with looping sounds at certain points in the game.
My system is 100% stable and flawlessly passes extended runs of the Prime95 torture test and Memtest86. My system is not overclocked and I have great temps on the components in my system. I have absolutely no problems running Unreal Tournament 2004, FarCry, DOOM 3, Painkiller and World of Warcraft among many other games that I own.
My gut tells me that this is a driver problem triggered by something that the Source engine is doing. In Windows NT based OSes, it is impossible for a user mode process to directly cause a total system freeze. However, a user mode process can certainly trigger a bug in kernel mode processes like drivers which can lead to a system freeze. I am going to continue looking into this.