I have to transfer the file to my Desktop running Windows 7  to save without the annoying background noise. Tried everything I could think of from uninstalling to re-installing to turning off the Laptop Microphone while it saves. Still the same problem.  Works perfect on my desktop running Windows 7. 

I have no audio issues either when I play music or listen to audio online. Only when I save a project and then play that project from windows Movie Maker. No sound distortion when I am building the video. I've transferred a saved movie to my desktop and it plays static same as on the laptop so it is not a speaker issue. The movie actually "saves" with the static in the background. 

Very frustrating. 

If this helps here is what I found in the Detail under properties of two exact videos, one saved on my Laptop in Windows 8.1 and the other saved in Windows 7 using Windows Movie Maker 2012 version on both:

Static distorted saved version from windows 8.1:

Video:

Date rate 20147kbps

Total bitrate 20248kbps

Frame Rate 29 frames/seconds

Audio:

Bit rate 100kbps

Channels 2

Audio sample rate 48 kHz

Good Version from windows 7 no distortion in background: