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as far as using optical, microsoft sells an hdmi cable that has an audio cable for surround systems. It has an optical or the red/white outputs so you can run to surround sound. Here's a link.

http://www.bestbuy.com/site/olspage.jsp?skuId=8479158&st=xbox+360+hdmi&lp=2&type=product&cp=1&id=1185267959809