Sorry for resurrecting an old thread, but this is useful for people like myself looking for similar information.
I find Dolby Digital Live indisputably the best with my set up - Pavilion DV6 laptop, Sony Da-5200es AV receiver + x5 Sony SSNX1 speakers. I have tried PCM 24 bit 192KHz and it does not compare. Neither does the 24 bit 192KHz RCA stereo.
Dolby Digital Live and PCM are both S/PDIF (Sony/Philips Digital Interface Format), meaning (as I understand it) that the signal is not converted into lossy stereo formats before it reaches your speakers, resulting in higher quality. PCM should supposedly be higher quality than DDL as it is the lossless original material that is then converted into lossy DDL. But your ears know better than the theory what sounds best to them! It may be that the PCM is handled by the on-board sound card, which in my case is surely inferior to the Xonar U7.
Try them, and see what works best for you. But if you want to go S/PDIF you'll need an HDMI or Toslink cable, like
this one, which will plug into the back of your Xonar. You will need an amp or av receiver with compatible digital ports.
My bedsit is now a night club, and I am loving it!
But the question is, can the DDL be ran above 48KHz 24 bit sample rate, as my options are set to that and greyed out? I want 192 24 of course! PCM does not play on my system above 96KHz 24bit. Is it possible to designate the Xonar the handler of it (or some other similar trick) that will yet still enhance my sound quality???