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I use it in MediaMonkey and I always need to change the install directory manually. I also need to switch off the "Winamp bug fix" option in the Stereo Tool settings because I don't think I need it in MediaMonkey? It's on by default. I don't know if there are any disadvantages having it on in MediaMonkey? I don't know how many actually notice that they could switch it off if they use other programs than Winamp.
It probably doesn't hurt to leave it on. And it might affect more programs than just Winamp.
Winamp, stops sending audio to the sound card at the end of a track, and then waits until the new one starts. Since Stereo Tool causes a small delay and is unaware of the fact that a new track starts, it will play the end of the previous file at the beginning of the new one - after the silence so it will sound like a hiccup.
This setting just clears the buffer if nothing happens for a while (which would be in Winamp when a new track starts).