I have a logitech Z5500 connected to 20" iMac. When I play an AC3 avi file it doesn't output over SPDIF. I get no sound. This is when i'm using the core audio module. If i switch to default then I get sound but its stereo. I've also tried MPlayer but it doesn't seem to output digital signal, I get only stereo. It seems like only the apple DVD Player supports output of digital signal. Am I missing a setting in VLC? or does anyone know of any other player that supports output over SPDIF?