I think the y-splitter does affect the sound quality. When I'm using my stereo I unplug my headphones and I can hear my speakers get slightly louder. So I think the output is weakened with a splitter.
I just took the splitter off and tomorrow i am going to get a longer RCA cable to plug into my stereo and have just my headphones in the line out of my sound card. Ill see how that works out.
EDIT: scratch that idea, it looks like sound will not come out of the RCA's while something is in the headphone jack. I wonder if Creative realizes that when this card is installed the headphone jack is at the back of the computer and therefore hard to get to. It would be nice if both outputs would work at the same time. I guess I have to keep using the splitter after all.
PS I'm kinda mad that i paid so much money for this card. I'm very happy with the sound but I just want to be able to switch from headphones to loudspeakers without added equipment. Does anybody know if xonar cards are like this?