Converting the audio was simple with the upgrade wizard. However, after upgrading the project I still had to make a few changes. Note after the initial upgrade the audioProject.xap file reference is moved to the content node.
This original audio folder directly under the MGHWin_24_Audio node needs to be removed from the project. To do this without erasing the contents of the audio directory, right click the original Audio folder in Solution Explorer and choose Exclude from Project. In the end the project references should be similar to the following:
The audio directory remains the same. The *.xap file and *.wav files together as before:
You will need open the XAP file with the 2.0 version of the XACT tool and then resave it to the same place to overwrite the existing instance of audioProject.xap with the upgraded version.
That's it. The project should run. Of course you can find the upgraded project in the download on this site.