I just got bit my this one myself, thanks Joel for working this one out.
However throwing an excpetion in this case seems to defeat the whole purpose of XACT. In the XACT world a sound designer makes decisions about what sounds to play, when and how loud etc. So if the sound designer has determined that there should be a limit and the result is FailToPlay then why should the developer have to worry about this. By all means give a return value if its something that some developers want to know about but throwing an exception seems pretty heavy handed. It means that we have to potentially wrap every single Play call in a handler just in case this happens - or change the limits to no limits for every sound effect.
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