I've tried messing with the mixer as well. Here is some output from aplay
linuxmce@dcerouter:~$ aplay -l
**** List of PLAYBACK Hardware Devices ****
card 0: CMI8768 [C-Media CMI8768], device 0: CMI8738-MC8 [C-Media PCI DAC/ADC]
Subdevices: 1/1
Subdevice #0: subdevice #0
card 0: CMI8768 [C-Media CMI8768], device 1: CMI8738-MC8 [C-Media PCI 2nd DAC]
Subdevices: 1/1
Subdevice #0: subdevice #0
card 0: CMI8768 [C-Media CMI8768], device 2: CMI8738-MC8 [C-Media PCI IEC958]
Subdevices: 1/1
Subdevice #0: subdevice #0
and
linuxmce@dcerouter:~$ aplay -l
**** List of PLAYBACK Hardware Devices ****
card 0: CMI8768 [C-Media CMI8768], device 0: CMI8738-MC8 [C-Media PCI DAC/ADC]
Subdevices: 1/1
Subdevice #0: subdevice #0
card 0: CMI8768 [C-Media CMI8768], device 1: CMI8738-MC8 [C-Media PCI 2nd DAC]
Subdevices: 1/1
Subdevice #0: subdevice #0
card 0: CMI8768 [C-Media CMI8768], device 2: CMI8738-MC8 [C-Media PCI IEC958]
Subdevices: 1/1
Subdevice #0: subdevice #0
linuxmce@dcerouter:~$ aplay -L
front:CARD=CMI8768,DEV=0
C-Media CMI8768, C-Media PCI DAC/ADC
Front speakers
iec958:CARD=CMI8768,DEV=0
C-Media CMI8768, C-Media PCI DAC/ADC
IEC958 (S/PDIF) Digital Audio Output
null
Discard all samples (playback) or generate zero samples (capture)
I assume device 2 is the SPDIF output. So the computer recognizes it.