OK, here's the deal: What the last guy said. The digital audio transmission is a series of electrical pulses. You send electrical pulses down a conductive cable, and viola, they end up at the other end. The type of connection you have is called Digital Coaxial by the home theater/hifi guys, but computer guys call it S/P-DIF (Sony/Phillips Digital InterFace).
Now, Creative screwed you bad. First off, they used a mono minijack instead of an RCA jack on the card. Second, they didn't include the needed adapter. You see, Digital Coaxial (aka S/P-DIF) uses an RCA jack just like the old analog stereo patch cords used. But the digital signal is fussier, being digital, so you'll want to use a high quality cable. I've heard that Digital Coaxial and Composite Video both use the 75-ohm cable standard.
And that takes us back to what the first guy said. The 1/8 inch mono jack to RCA adapter is simply providing a 2 conductor electrical connection to your Digital Coaxial cable. Ignore the fact it's an "analog" adapter, because that doesn't make a difference, it's a solid metal conductor and that's the end of the story!
Like the old auctioneer said "Call it what you like, use it for the same purpose".
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