Basically, what I need is a way to tap into the current audio output and check the sound level, i.e. I need to be able to check whether there is something playing on the aud
Here is a helpful link for Windows API invokations, and here's exactly what you are looking for:
http://www.pinvoke.net/default.aspx/winmm.waveOutGetVolume
Since the requirement changed and you don't need the audio level I suggest the following might help:
I think you need to read what is being playedback on the output stream and by analyzing the data in some algorithms you might be able to decide weather something is being playedback or not. To do this you need the MMDevice API
http://msdn.microsoft.com/en-us/library/dd316556(v=VS.85).aspx
I don't want to discorage you but believe me this is not going to be easy to accomplish if you are not familiar with unmanaged code.
And even if you accomplish that you can't anticipate the outcome behavior of the device. Good luck.