Equalizing in real time causes no problem. You said that you use Foobar. There's an equalizer in it. You can try it.
For the quality of digital output, with Windows XP (it's not true for other OS), there are three categories of soundcards :
Soundcards that resample : Creative Labs, Integrated audio chipsets, Hercules, Turtle Beach... On music, the effect is marginal. Actually, no blind tests were performed on musical samples to see if there was an audible effect. There are killer samples for sure, however.
Udial being the worst. Another example : you can't test your audiotion with such cards, because they are unable to play high frequency pure tones without audible distortion, even in the digital output.
The second category is the soundcards that don't resample. You can get Windows to play audio losslessly in their digital output, if you disable their mixer : some cards from Terratec, M-Audio, Midiman, Hoontech, Echo don't resample. However, Windows XP itself doesn't let the audio played by Foobar reach the soundcard unchanged. This time the sound damage should be inaudible. Also, if you use ASIO or Kernal Streaming instead of the standard audio output, you bypass Windows XP's drivers and get a lossless playback.
The last category is the soundcards that use MME drivers instead of WDM. They can play audio losslessly in their digital output, directly from the standard audio output. The player don't have to support ASIO or Kernel Streaming. Some RME and Marian cards belong to this category.
But it's impossible to play a recent video game with them.