if you want the best sound... you should use whatever the highest quality option available is.
for mp3..... 192kbps is good, 256kbps is better, flac is even better but as you progress file sizes increase... personally i like using 192kbps.
in games i just pick whatever the highest option is.
as far as movies, it should default to the highest quality sound available. i've never had to mess with any settings in wmp or power dvd.