I use the U3 for my PC to send optical out to my X7. I can send either Dolby Headphone, so the X7 would only need to do DAC and Amping duties (turn off SBX when doing this), or I can send out Dolby Digital from the PC to the X7 to convert into SBX. If I don't use the U3, and stick with just the PC to X7, I will NOT get Dolby Digital, and instead will have to rely on PCM to be converted to SBX which does NOT sound as good. I'm referring to virtual surround algorhythm sounding better, not talking about sheer technical performance.
I don't understand what's confusing about this. In all cases, the X7 is pulling all the weight. The U3 is only there for ensuring I get a digital DOLBY DIGITAL or DOLBY HEADPHONE signal to send to the X7.
Like I said 76389274874809 times, if the X7 gets Dolby Digital to light up on the front, it will do SBX surround better than when just doing X7 - USB - PC, because it will NOT get Dolby Digital from a PC this way, it will only get PCM (the Dolby Digital label will not light up on the X7's front face).
As for what the X7 can get from the PC, it can do PCM 5.1.
For console, obviously not using the U3. The console sends proper Dolby Digital to the X7, which is why I say it sounds better for the virtual surround.