If I understand correctly then, in your opinion the system volume at 100% and playing with the amp volume to set the desired sound level should deliver the better sound and the less distorsion?
Yes. Send a maximum of 50% volume from your PC to avoid distortion. Since MC cannot control the Wave out volume then this is the one I set in the mixer to be permanently at 50% 'cos no one can easily change it.
IMO the Audigy2 is a great soundcard for the money. It seems to be 'cool' to bash soundblasters but in the case of this card it's unwarranted.
Though the M-Audio Delta DIO is a high end card and sound quality is marginally better on high bit rate or lossless tracks the Audigy offers much more control and customisation of the sound which I'll miss when playing lower (128k) bit rate tracks. For example, I used the parameteric equaliser for these tracks and it really made a difference.
I also liked having the Bass & Treble controls as I could alter these on the fly using my remote and On Screen Display with Girder. I know that audiophiles will quiver at the thought of using any type of DSP or tone control but the reality is that it does help sometimes.
Tonight I will reinstall the Audigy2 alongside the Delta DIO and make a comparison to decide if the loss of easy to use tone controls is a worthwhile trade off for the marginally better sound output. One thing is for sure - at £50 compared to £150 the Audigy2 wins the value for money battle hands down.