I was looking through DSP studio and noticed the Output Format section. It appears that it can change the output to 5.1 output. However, I can't seem to get it to work. I have a SPDIF optical connection between my computer and Yamaha receiver.
The DSP studio channel options are intended for playing decoded multichannel audio files through the usual analog multichannel outputs (5.1, 7.1 etc).
On DVD playback you can direct the undecoded DD or DTS signal through the sound card's digital output so that the receiver decodes the output. This is not different from the situation when a stand-alone DVD player sends undecoded DD or DTS audio stream through SPDIF to a reveiver.
You need to use a DirectShow filter that has a configuration option for digital passthrough. For example, FDDShow has this option.
When I play DVDs with VLC, I always see the display show 5.1.
VLC uses its own playback filters instead of DirectShow. Probably it is configured to use digital passthrough.
Since there wouldn't be much advantage compared to letting the receiver make up the 5.1 surround, it's not important, but it's appealing.
Real 5.1 (or 6.1) content is much better.
Also, what about 7.1? My receiver supports this and I have the two additional speakers hooked up.
If you can use digital passthrough then the channel amount is not altered. The receiver gets the complete undecoded audiotrack. If the DVD has more than 5.1 channels it is up to your receiver to decode it and create 7.1 output.
AFAIK, the available "more than 5.1" standards are:
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Dolby Digital EX 5.1 (aka THX Surround EX) matrix, a surround back channel is encoded in the surround L&R streams
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DTS-ES 5.1 matrix, a surround back channel is encoded in the surround L&R streams
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DTS-ES 6.1 discrete, real separate 6.1 channels