It apparently senses that the speakers are not plugged in, according to your display and then defaults to the S/PDIF output.
I notice it says "High Definition Audio Device" which usually means the generic Windows installed sound
driver rather than the specific sound
driver for whatever sound device you have. If this is the case, install the sound
driver from the motherboard vendor's site, as that will be the correct driver. We see a lot of sound problems on the Dell users forum where the generic Windows installed HD Codec audio driver has been installed instead of the correct Dell supplied sound driver - either does not work or does not work correctly.