I had a different problem with this default setup. My audio worked fine,
but MPD had a broken volume knob.
The problem appears to be this pair of lines:
device "hw:0,0"
mixer_control "PCM"
On my card, hw:0,0 isn't the PCM channel, so this results in mpd
fiddling a different volume knob than the one it's playing through.
Commenting these lines back out, or replacing "hw:0,0" with "default",
made it work.
Since the ALSA config already has a way of specifying a default device,
shouldn't the default mpd.conf just use that one, instead of overriding
it with hw:0,0?
-Mark