So far as I know, the TiHD only has software emulation; if it produces the EAX5 effects and gets them all the way to the speakers, good. SPDIF has enough bandwidth for two channel audio.
Are you using fluidz' method of TiHD > headphone DAC > headphone amp > headphones?
One other alternative is to use a Fata1ity Pro and run in WinXP to get hardware supported virtual surround > headphone amp > headphones.
From what I've read, virtual surround is inferior to actual surround, which hasn't been entirely successful if reviews of sets with discrete drivers are any indication. It's why I'm going with 7.1 bookshelf speakers and a receiver (don't know how I'm going to drive the speakers from an output that supports EAX 5.0; optical, USB 2.0, and coaxial don't have the bandwidth for eight channels at 24-bit 192KHz; might have to go with a different AVR that has 7.1 RCA inputs, then get RCA to 3.5mm adapters). I've asked questions regarding software support on Creative's official forums, but activity on the forum is dead, even with official Creative employee users.
No, the X-Fi Titanium HD is a real X-Fi with the EMU20K2/CA20K2.
It's made obvious by the fact that it has Game Mode and the ALchemy dsoundlog.ini says "Using Native OpenAL Renderer" instead of "Using Creative Software 3D Library" like it would with Creative's software OpenAL renderer (which is NOT the "Generic Software" renderer, by the way).
I don't use an external DAC; there's no reason for me to with the Titanium HD's own DAC being good enough, and the only external DAC I have, that being the JVC/Victor SU-DH1 Dolby Headphone processor, is a noticeable downgrade. I could use an external DAC, but that would negate the point of having the Titanium HD over the non-HD X-Fi Titanium, alongside any DAC that would be a worthy upgrade being so expensive that it's money better spent on improved headphones and amplification.
Everything I've read about "true surround" headsets with multiple drivers is that they generally suck, like how Mad Lust Envy scores the Tritton AX Pro far lower than all the other headphones and headsets with Dolby Headphone (though there's this one headset that cropped up on InnerFidelity once and received surprisingly positive reviews), and I have yet to hear a 5.1/7.1 speaker system that has CMSS-3D Headphone's level of "shoot that guy in the face through a wall on the floor above you" levels of pinpoint positional accuracy.
Part of that's because for a speaker system, you need to treat the entire room to have ideal acoustic properties, then the speakers themselves must be placed in very exact positions in that room and the listener seated in just the right spot for the positional cues to be right. Then you'd need several good speakers and amplification for each, preferably some nice Quad/Acoustat/Beveridge ESLs for all the channels besides center and LFE. I'd rather save myself a lot of money and hassle and just slip some headphones on my head.
Also, surround speaker systems have no height channels, for the most part; setups above 7.1 that introduce them are a relatively recent thing, and rarely supported. That means you're getting crude 2D positioning at best...not that this benefits current games any, but back when games actually had honest-to-goodness 3D audio, it would be a disadvantage.
Virtual surround done right, on the other hand...it's not simulating a room full of speakers, but the game environment itself, approximating how our brains interpret positional information in real life using just two ears. Aureal understood this back in the late 1990s; it took everyone else, including Creative, a few years to catch up and realize why that was a worthy alternative to the quadraphonic speakers, and that's why A3D was so ahead of its time.
There's a chance that virtual surround won't work for certain listeners if their own HRTFs deviate from the human population's average HRTF too much, but for most of us, it works excellently. There wouldn't be so many advocates of virtual surround over headphones if we didn't think it was the better way to go.
