There's a simple fix for this issue, assuming you have some basic sound card control available through your driver. For reference, I'm using S/PDIF through a Gigabyte motherboard, with Realtek driver (and "Realtek Digital Output" control pane).
In this setup I can go to the "advanced" tab in the Realtek Digital Output Properties, and uncheck "Allow applications to take exclusive control of this device". By doing this you're forcing Media Center to mix audio (to share nicely with other apps) through software before spitting it out the S/PDIF. If I re-check this box I'll lose the ability to control volume during 5.1 playback in Media Center.
If you select the "shared mode" to be 5.1, then you can keep your nice surround sound. I can't tell any difference. Sweet.