Under preferances in DVD player if not mistaken there is an option you must set for Dolby digital to work, not 100% sure of this, will go look when I get home.
ABout the Mac's sound card.
The sound card build into the Mac is stereo ( 2 channels ) and will only deliver mono or stereo sound. Even if you use an adapter like the one I got with my Loictech speakers that allows you to connect all 5.1 speakers to the stereo output the sound will play through all speakers but it is not true surround.
The type of signal that is send to the digital output depends on the source, if you play a CD it will be PCM, if you play a DVD with Dolby Digital sound track it will be Dolby Digital. Your Amp / Receiver must have a Dolby Digital decoder to decode the signal. Dolby Digital can be 2 channels as well it is not always surround.
CD's are stereo, all though most amps / receivers got DSP's in which will play the music on all 5.1 speakers ( also not true surround ). Same goes for games.
Not sure if there are Apple games that are written for Dolby Pro logic and pro logic II, if there are they will be surround if you got a Pro logic / pro logic II decoder in your amp / receiver.
SACD / DVD Audio is multi channel - need SACD or DVD Audio player to play these. These players use 5.1 analog output, these can not be put out via digital output so with these players you need amp / receiver with 5.1 analog input.
If you where able to use M-Audio's PCI sound card in the Mac your music CD's will still be stereo or not true surround. Same with games unless the game have been written to take advantage of the sound card.
Hope this helps
Message was edited by: Freddie Herbst