Windows 7 - SPDIF difficulties...help!

Hi,

I'm getting into a muddle over something I thought would be simple to do.

I have a DVI to HDMI going from my PC to my LG LCD screen. The picture plays fine but I have no sound (and, for some reason, if I take a line out from the headphone jack to the tv it routes the sound through the unused HDMI, so I can have sound OR picture but not both! But that's another issue...).

I did some Googling and found that I can link my NVIDIA 9800GT to the motherboard GA-G31M-S2L via a SPDIF cable.

I got one from Ebay and linked it up. I've attached the page from the mobo manual regarding SPDIF. I'm not 100% sure that I have the pins right, but think I have. The black plug obviously goes to Pin 3 ground (nearest the mobo's edge). The Red one, from what it says, goes to the Top Pin (Pin 1). Is that right?

I assume it should instantly send sound with whatever picture is being sent through the HDMI? It isn't.

I opened a video in VLC and opened the prefs and ticked 'Use SPDIF where available' but it made no difference.

THEN I found THIS article;

How to Use The SPDIF Connector Available on GeForce Video Cards | Hardware Secrets

which would, as far as I can tell, be suggesting that I should be connecting the Red plug to Pin 2?

I'm hoping someone will be familiar with this mobo and give me a definitive answer, but, given that it says in the manual, I assume for now that the first option is correct.

Even if it is, I still have no sound.
I'll also attach what I see when I open up 'Playback Devices'. I keep hearing people say that an HDMI option should be present, but as you can see, it's not. I've tried 'enabling' the SPDIF option but had no luck.

My TV had no option to select sound input types, I guess it just picks everything up from whichever source it's set to.

I guess the SPDIF cable could be faulty, but then there are probably so many things I could be doing wrong or not doing at all...

As you can tell, I'm in a muddle. All I want is to be able to select the PC HDMI on my tv, play a film and watch and HEAR it through my TV.

I managed to do this on my Dad's Vista laptop on his LG a few months back with no problem using the headphone socket for audio out. My set up seems to be being awkward though!

Ideally I'd like the sound travelling through the HDMI lead with the picture though.

Any advice would be hugely welcome!
Thanks
Mark