Digital Audio Broken on a Mac Mini (early 2006)?

I've got an early 2006 Mac Mini 1.83GHz which I'm trying to use as an HTPC. When plugging in an TOSlink to miniplug cable to the audio port I get the "flipover" to Digital Out in sound preferences but no sound from my Pioneer AV receiver. I've made all the correct adjustments in the receiver preferences and tested them with a iMac and sound plays through just fine.
Headphone and Internal speaker work fine on the Mini and the cable is fine as noted above with the iMac test. Is it possible that the optical digital audio portion of this jack is bad?
Apple Support doesn't seem to think it is hardware related. I've re-installed OSX and checked permissions. I don't have the restore disk to be able to do a Apple Hardware Test and the Leopard disk does not contain it.
Any ideas as I've run out aside from taking in to an Apple Store for evaluation?

Took to Apple Store and they fixed the unit with a new digital audio card. $49. I'm happy.

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