Yes the audio works even with the static. The static is there when both PCs are about as idle as they get. There is a lot of other tech around (mesh router is basically right next to the laptop) in general though. I am doing this not to record or stream but instead be able to listen to music/video off of one while using the other.

My current thought is I need some kind of sound card or as you said pair the line in of the desktop with something from the laptop that works as a line out and not a headphone jack.