You need a sound card that supports sending sound through a program. In other words, my sound card has a setting that allows me to select "Out put" as my "Input."
Most sound cards do not support this feature, and the lower ones usually support it but crappy at best. Basically, high end sound cards are needed for "undistorted sound." [ Caution: ALL SOUNDS THAT YOU HEAR FROM YOUR SPEAKERS WILL BE SENT AS WELL! ]
Also, it depends on the driver version as well. Since I updated my driver, the sound is crappy compared to the version to what was played over teamspeak before.
In essence, high end sound card + correct drivers = Undistorted, nearly flawless sound
Edit: I used WINAMP/WINDOWS MEDIA PLAYER and MP3/WMA files