Yes. I have done this myself. I actually had my xbox hooked to my TV via HDMI and then used the optical out on my TV to connect to the Sound Blaster optical-in.
You have to make sure that the audio going into the the sound card from you TV is in stereo. It will not recognize Dolby Digital. So for me I had to go into my xbox settings and disable the 5.1 sound option so it would send a stereo signal. So whatever audio source you are using just make sure it is sending out stereo.
You can use the the SBX software's surround sound option along with all the other adjustments such as bass boost and the equalizer.
I would suggest getting the Sound Blaster Z instead of the Zx. It is the exact same sound card. The only difference is the Audio Control Module (ACM) and the ACM degrades audio quality. The Zx has a little better microphone built into the ACM....but it is not $50 worth for the price difference.
For more detail on the Zx model - I wrote a review on amazon. Here is a link: http://www.amazon.com/Creative-Blaster-Gaming-Control-SB1506/product-reviews/B009XDWUCQ/ref=cm_cr_dp_qt_hist_three?ie=UTF8&filterBy=addThreeStar&showViewpoints=0
My user name is Povell42 on amazon as well.
Edited by Anarion - 4/21/13 at 10:52am