[DanielMiracle]

It's the analog audio signal that picks up the electrical noise.
Using USB or optical or coaxial, channels the audio signal outside of the computer case, while the signal is still digital.
As the DAC (Digital to Analog Converter) is outside the computer case (using the Modi DAC), the digital audio signal will be changed to an analog audio signal outside of the computer case.
Sound card work fine with external (optical or coaxial) DAC/Amp.
I'm currently using an external DAC/amp (NFB-15.32), connected optically to my computers Xonar DS sound card.

Okay, that sounds great! Now what if I wanted to turn off the surround sound to listen to music or something. How would I go about that? Would I be forced to disconnect my Dac/amp from the sound card or could I do it from my computer itself?

 

[PurpleAngel]

Okay, that sounds great! Now what if I wanted to turn off the surround sound to listen to music or something. How would I go about that? Would I be forced to disconnect my Dac/amp from the sound card or could I do it from my computer itself?

 
For outputing headphone surround sound, you would enable DDL and set the sound card's audio channels to 6-channel or 8-channel.
For stereo music, disable DDL (or set to PCM) and set audio channels to 2-channel.

 

[jincuteguy]

You can send virtual surround sound if you use an external DAC with an optical or coaxial connection and connect it to the sound card. The sound card can then apply DSP to the digital signal before sending it to the external DAC for conversion.

 
I have the Creative E5 DAC / Amp and I can't get surround sound or any DSP from my onboard audio using an Optical cable.  Like when I hooked up to the optical of my onboard audio, all of the DSP options are diabled.  My onboard audio has the DTS surround sound thing.
So all of the audio signals coming from my on board audio through the Optical cable is just "Pure" sound, there is no DSP processing.  Then it goes straight to my E5 optical input.
 
The only way for me to get surround sound is just using the E5 only with its DAC / AMP SBX surround.

 

[PurpleAngel]

   
I have the Creative E5 DAC / Amp and I can't get surround sound or any DSP from my on-board audio using an Optical cable.  Like when I hooked up to the optical of my on-board audio, all of the DSP options are disabled.  My on-board audio has the DTS surround sound thing.
So all of the audio signals coming from my on board audio through the Optical cable is just "Pure" sound, there is no DSP processing.  Then it goes straight to my E5 optical input.
 
The only way for me to get surround sound is just using the E5 only with its DAC / AMP SBX surround.

 
With the E5 hook up with USB and the Creative software doing all the SBX headphone surround sound processing, you really have no need to use the on-board audio.
I'm guessing the computer sees the Creative E5, connected to the USB port, as the default sound card, so I'm guessing the computer (Windows) is just ignoring the on-board audio.
I would assume the E5's USB connection is where the computer sends the audio signal (from the Creative software) to the E5 and also the USB provides power.
So even if you wanted to use the E5's optical input (on-board audio optical to E5), as soon as you plug in the USB connection, for power, the computer also automatically bypasses on -board audio and make the E5 the default audio device.
If you got a USB wall charger ($6), you could plug the E5's USB cable into it, for power, this way the computer would use it's on-board audio, which would allow you to use it DSP features, thru the optical port
http://www.monoprice.com/Product?c_id=112&cp_id=11212&cs_id=1085102&p_id=10273&seq=1&format=2