For music, I use Winamp by itself, without any DSPs or anything like that, just the pure 2-channel PCM.

However, for my ripped DVD-Audio discs (I won't even go into how much of a pain those were to rip), I have no choice but to use my PC to reencode them into Dolby Digital (I'm hanging onto my aging Soundstorm motherboard.)

I also play all of my DVDs (whether they're ripped to the hard drives yet or not) on the PC. I recently switched to Vista's Media Center as a frontend, though I generally just use MediaPlayerClassic for video files.

I really love it, its gotten rid of a large pile of wires that I had behind my receiver, namely the CD changer and DVD player. However, it's still not perfect in that if I want the true audio from DVD-A or ever move to HD-DVD/ Bluray, I'll have to either reencode the sound or start using the very inferior DACs in my onboard sound.

This is the only reason I ever will care about HDMI, if I can pass through a 7.1 channel PCM signal digitally to a receiver, then it'd be a godsend (with all format decoding done in software). Its rumored that the upcoming R600 videocards from AMD/ATI will have audio capabilities, hopefully that'll be what I'm looking for.

As for my output, the digital PCM output seems to be louder at the same volume than when I used a CD player (and is also louder than my Xbox and Wii sources).