Gannu said:
It wouldn't which implies your sound card cannot decode Dolby D/DTS signals.
No, it implies that the soundcard decoded DD/DTS signal to analog. The Z-5500 pod now obviously doesn't know what source that analog signal is coming from, so it shows "6 ch direct".
Had the soundcard not been able to decode DD/DTS, all you would hear is static (I'm guessing that isn't the case).
Gannu said:
Someone with a similar setup can answer that. Why don't you give it a try? SQ may be better or worse but you'll give up on the surround setup when you switch to analog inputs.
Again, if he has the soundcard drivers/speakers set up correctly, he'll get 5.1 surround without any problem.
@matrix0683: check your setup. Usually sound drivers have a speaker test (as well as windows vista/7). Do that speaker test and ensure each speaker responds in the correct order. If that is so, you're fine. May need to tweak the settings at other places a bit for optimal setup.
PS. As far as my experience goes, I had an ASUS RIIE with a daughter soundcard. I used analog and optical connections through that and, to me, the optical connection sounded louder and crispier.
Besides, I liked those dts and DD signs glowing on the pod.
You can also convert other 5.1 signals (like AAC) to DD/DTS signals by using post-processing filters. ffdshow for audio can do that for AAC.