I would like to share my solution to this problem when I encountered it. Granted, it's on a different model and driver (mine is VIA HD Audio) but here it is anyway:

Hardware:

ASUS P5KPL-CM (onboard sound)
Nvidia GTX275


I routed my S/PDIF sound to the GPU using a connector which goes to the S/PDIF-OUT from the mobo to the GPU. Mind you, I didn't exactly follow the board's labelling (I connected the non-GND connector to the +5v) because I don't get sound when I followed the labels.

My solution is I uninstalled the VIA HD Audio driver and just used the sound driver provided by NVIDIA (which came in their driver releases, mine is 197.45), and it the static is gone.