Well after fighting with Linux for about a week I finally decided to scrap it. I fought trying to get the audio to work properly and it never would really work 100% and even when it would work it would stop working for no reason after a short time. So I installed Windows 7 x64 RC, installed Boxee, plugged in my digital optical cable, changed default output to SPDIF and everything worked like a champ first time with no issue. It even play’s ISOs with sound which I never did get working in Ubuntu.
I guess this is probably why Linux will never make it in the mainstream desktop market.