Not sure if this is a Google Chrome bug, a SoundManager issue or I am doing something wrong. It only happens in Google Chrome and only when Flash is enabled.
I have a parent <div> with overflow-y: auto.
When SoundManager loads, it creates a new <div> element #sm2-container at the bottom of the page.
On $(window).load(), I reposition that element like this:
$("#sm2-container").css({position: "absolute", top: "0px", zIndex: "10"});
However, the scrollbar appears messed up:

When I disable Flash or “display:none” the #sm2-container, it looks and acts normally, but I have no sound:

You can see the issue live here.
This definitely looks like a Chrome bug for me too, because scroll bar is only displayed shifted, in order to scroll I have to aim mouse at where it must be placed.
A fix: By setting
$('#sm2-container').css('z-index','-10');I can hide it and this fixes scroll bar in Chrome.Sound still plays OK (as I understand, controls for it are in right panel so it is OK for it to be hidden).
Should something be visible in
#sm2-container? It looks empty for me, only by right-clicking it displays Flash menu.