When I finally updated my HelixLT to 3.5 I had this same problem (Win7, 64 bit, SP1).
The driver properties are shown as v.1.97.0.2.
Cannot play audio from computer through Helix.
Cannot connect to Workbench HD, or my DAW programs (Reaper, Audacity, RiffWorks).
Also tried re-installing the full v3.5 update.
I also had no issues at all prior to the update.
I tried following the instructions offered by mritt -
control panel>device manager>sound, video and game controllers>right clicked, selected PROPERTIES >chose to ROLL BACK device drivers.
Rollback button is grayed out, cannot select.
IHHguitar and mritt...or any of the Helix gurus that hang out here...do you have any ideas.
Have tried calling Line6 Support but haven't been able to get through yet.
Any help will be much appreciated - thanks in advance (I hope).