Windows 7: Realtek - No audio above Stereo 2.0 on Windows 7

I had a whole reply typed out but it seems to have disappeared, strange, anyways I'll try and recall what I said. To get 5.1 sound over spdif (Dolby Digital / DTS) you need to enable exclusive mode on your sound card. Outputting 5.1 sound requires exclusive access for the application outputting the sound. Any other application that tries to produce sound while another application is in exlcusive mode will be denied. 5.1 audio cannot be mixed, it 1 stream only. So to get 5.1 sound you will need something like ac3filter to do the passthrough. PCM audio is 2 channel and can be mixed which is why you only see the stereo option in control panel from your screen shot. Also when you use spdif passthrough (5.1) you will not be able to control the volume through your PC, the receiver will have to do that.

If the content you are playing is only 2 channel you are better off setting your receiver to virtual surround (every receiver calls it something different) and have it simulate 5.1

i solved my problem, and it was staring me right in the face.

after spending many many hours trying to find a solution to this problem, and searching every blog and tech forum i could, i eventually did the following.

uninstalled all sound drivers, and codecs, then booted machine in safe mode and used a driver removal software to check that all drivers were infact gone (software found a few items still remaining in registry and system folders) rebooted machine, and installed R1.95 drivers. pretty basic so far.

i then installed ac3 filter AC3Filter and settup so that ac3 uses spdif pass through.
installed media player classic x64 version
(for some reason when i use vlc and setup to use spdif sound is laggy, jumpy, echoee, or plays ok for a few seconds the gap then plays for a few seconds then gap) [rather annoying]

then went back to digital properties and adjusted my output to 24bit 48Hz

and vola problem solved for me.

i think that because i was trying to use 24bit 96Hz output my amp would only see this as stereo.

so basically check your output sample rate and see if your amp/ digital reciever can infact decode the sample rate you have it set your sound card to output.