Xonar DS can't do Dolby 3D, so therefore wouldn't exactly be the best for a surround system, although Dolby 3D is meant for use with Headphones.
Xonar DX/D1 (Based on if you need PCI or PCI-E x1, other than that they the same card) should do nicely. The Xonar D2(X) is pretty shiny and a very nice card, hell the outputs are colour coded with LEDs, but it might be surplus to requirement.
Music can be forced into 5.1 somehow without a soundcard, DE managed it but that was using the analogue connections on the speaker as opposed to a digital connection.
In terms of why games aren't working, beats me. I take it you're using the add-on audio card for your mobo? Is it possible to use the analogue connections instead or is the surround system digital only?
Edit: Just realised you're using the port on your mobo, can you try the add-in card you've got?
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