Someone else had reported that DirectX 8.1 and 9.0 DXDIAG can crash when checking digital signatures.
In your test with disabling/enabling the driver with DirectX 5: I have no idea what a STATESTS value of 0xBDF7 could possibly mean, the specification defines the high bit as Reserved, Always 0. The only thing I can think of to do if that happens is reset STATESTS and then reset the controller.
e: no it has to be reading complete garbage instead of HDA controller registers, i should return an error as soon as the version number doesn't make sense.
DirectMusic will always be user mode not kernel mode; my driver doesn't contain a MIDI synthesizer and relies on the stock general MIDI Microsoft GS Wavetable Synth. I'm currently exploring other ways of doing FM sound in DOS games (resurrecting the old VDMSound project) but it seems I will need to disassemble the port trapping VxD to add more features. It could use some buffering for port writes to reduce the synchronization overhead, it fails really badly with Diode Millliampere's Adlib Tracker music.
e2: I don't know why in some of these dxdiag logs it lists my driver's name as "°" (0xB0 0x03), where can that be coming from?