Creative products have always been a little, well, quirky (the less charitable might say buggy). Which seems odd for the world’s largest and most expensive consumer soundcard manufacturer.
Quirks like undistorted 5.1 sound not being available in otherwise reference quality racing game “Flatout 2”. Or never having a digital optical or coax out. Or insisting that you must use their fairly cheap cable to connect your £200 sound card to your expensive multi-channel amplifier.
I bought myself a Creative X-FI along with the digital I/O module. I use a multi-channel connection for gaming and music and the digital optical output on the I/O module for DVD’s. I should mention that I am thrilled with the sound quality on the card. It is a distinct pleasure to listen to music or be surrounded by detailed sound effects in games that support it.
The quirk
Whenever the machine is restarted, the digital output doesn’t work. Therefore, if I play a DVD in PowerDVD I get no sound from either the digital output (which PowerDVD is trying to use) or the multichannel output (because PowerDVD is attempting to use digital output).
The Fix
The fix is to go into Control Panel -> Sounds and Audio Devices -> Volume: Advanced. From the Playback volume window select Play Control -> Advanced then uncheck and recheck “Enable Digital IO”. Close, close, OK. Digital IO is now restored.
The solution is simple enough but why should I have to perform it? Especially as Creative stack my startup sequence with so-called ‘helper’ utilities that never explain what they do or why they should be left running.
Screened by Slimm 
I have the same problem, or very near the same. Every time I restart my computer, the Digital I/O doesn’t work. I have to open up the creative console every time and switch around the multi-jack off then on digital. But next time you restart, you have to redo it. Screw XP, it doesn’t do it in Vista or 7.
I found some interesting info at the creative support site.
Turns out that AC3 / Dolby Digital will be exported in the native format, but if you have decoded 5.1 it will be output in component mode only. You need a DVD player software package like PowerDVD setup in SPDIF output format, and this will pass through encoded digital to your amp. Best to have an amp with Auto mode, that will change to Analogue or digital mode depending on what comes through the coax (bitstream or nothing)
I have the same Audigy problem. I get digital stereo only (2 channel without sub). Yet I plug the coax into my stand along DVD player and get Dolby Digital 5.1 perfectly. (my AV receiver automatically senses the mode and changes over)
I agree with you. I have a slightly different problem tho. I just recently purchased the i/o module for my sound blaster audigy and I have no idea how to work it. i enabled digital output only but it still doesn’t work and since there is absolutely no REAL documentation im left struggling to figure out wtf I’m supposed to do to get this damn thing working! Im so pissed!
There is an option at the Creative console. If you go to the tab that you choose the number of your speakers you can see an option to synchronize these settings with the control panel. Does it fixes your problem?