[I hope this doesn't fall into the "Well DUH, we all knew that" category.]
Visited Rob's MAD web page to see if there was anything new and noticed this: "24-bit output is not reported to work with the DirectSound plug-in." Well, let me make a report that it does indeed work with Direct Sound.
I had done a fresh install of W2k and SP3 a couple of weeks ago on my multimedia PC. Loaded the latest VIA 4-in-1 driver support. The only sound device is M-Audio 24/96. Fresh install of Winamp 2.81. Went into Winamp preferences and set up MAD @ 24 bits. Output apparently defaulted to DS (I didn't check it at the time.), but everything worked perfectly. I became curious what Winamp was using when I saw the above comment about DS, so I looked and sure enough DS was enabled and operational. To double check, I removed "out_wave.dll" and it still functioned normally. I've also confirmed that MAD is operational by the "active" checkbox and by playing with the title options.