1. The AirPlay audio quality is degraded when XBOX music application is running on Windows 8.
Update 30/Sep/2013: With the introduction of Virtual Device Loopback capturing mode in version 0.9.10.0, this issue can be avoided by switiching to Virtual Loopback Audio capture mode. Click for more information.
Running XBOX music application, even in the background will degrade the AirPlay audio quality for all applications.
The only workaround is to close the XBOX music application, and use any other music application instead (how to close a Windows Store app?).
As per Microsoft, the degradation is done on purpose to prevent premium content from being recorded and saved.
Other music applications such as Spotify, iTunes, Amazon Cloud Player or web apps running on an internet browser have no such issues.
So far we have found this problem to be only with the XBOX music application. Are you experiencing this issue with any other application? Please let us know.