Is Digital Output worse than analog output in 5.1 set

Hi, I've read in this forum (I don't remember where) that Digital Output doesn't sends 00% of sound, instead it reduces its quality by something (encode / decode) so I would like to know your opinions and if this is true or false?
I have plans for using 5. sound.

The sound card, as I said before, will send out DolbyDigital or DTS recorded on a DVD-Video. This is because the encoding process happend in the studio, at the making of the disc.
Any other surround sound, created in your computer (like the games) will not be encoded surround on the digital out. That goes for X-Fi also.
And Yes, the DD and DTS are compressed formats, but are waaay batter that any other compressed format. DTS in my opinion is the best, but occupies more space on disc (higher bitrate).
The only uncompressed surround is the one on the SACD discs or the one on DVD-Audio (actually this is compressed but without loosing information, kinda like the zip files).
There are sound chipsets capable of Dolby Digital encoding: one is the nVidia's nForce2 motherboards with SoundStorm (not in production anymore). This is the same chip used in XBOX (that has DD out).
The others are some chips made by C-Media: CMI8768+ (only the PLUS variant) and CMI8788 (this has DTS encodin also). But the encoding is done software, and occupies some 0% of the processor time. Not really good...
Message Edited by SoNic2367 on 04-2-2006 08:2 PM

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