I solved it with this
I had been struggling with this for months, I got this little box and it works perfectly:
Diamond External Xtreme Sound 7.1-Channel USB Audio Device
http://www.amazon.com/gp/product/B0046B9O9W/ref=cm_cr_mts_prod_img
Plugged it in, let Windows 7 work it all out...
I have a Lenovo(IBM) Thinkpad T61P on XP and an Advanced Minidock with coax S/PDIF output.
Device Manager says I have "Soundmax Integrated HD Audio"
I have an analogue set of speakers Altec Lansing VS3151
http://www.alteclansing.com/index.php?file=north_product_detail&iproduct_id=vs3151...