Yes Brick just replied to my support ticket and explained that it is video file (or better a .flv) file that is used. A very strange (workaround) not really a implementation of directional audio, at least not a resolved feature.
Not really anywhere as I would have expected for a "sound" feature but useful to a point none the less. Possibly would have been better if it worked with standard .swf files instead of .flv files. Like I said, this is really a workaround.
Really this should have made the Help file documentation. I'm not a fan of chasing shadows. Pano2VR has me chasing them often also.
Well, lets see if I can put it to use!