Hello!

Firstly, I must mention that my experience with audio, both hardware and software, are a tad limited. Hence why I'm posting here.

My setup
I have a Xbox 360 connected to the computer via the R/W(Red/White)-cables from the Xbox 360 VGA cable-set. The R/W cables goes into a 3.5mm adapter and from that into my motherboard's line in. I then use my Realtek drivers to playback all input through my ordinary output. This goes to my 2.1 audio rig.

Simply put it looks like this: Xbox 360 -> PC -> Audio device
My situation
Using this setup is fine but when moving into an appartment you can't play your music (or game etc.) very loud at 4AM, thus I need to prepare a better setup.
My plan
I was thinking about getting a headset or just some headphones which by itself seems like a simple task but here it gets more complicated. I browsed through headsets/headphones and saw that there are 5.1 (and even 7.1) versions and since I love a good sound system I must have one of those if the quality is good.

First question: Is 5.1 headphones using real surround-technology and will the trouble of getting a 5.1 setup give an awesome difference in my audio experience? (I won't go 7.1 since I'm not very wealthy ;))

So with headphones connected (with USB since that is what is needed to get the 5.1) I have to somehow route my 5.1 input from my Xbox 360 (more on that in a minute) to the USB headset since it is two different soundcards. To this purpose I was planning to use Audio Repeater which repeats audio from input in audio device X in the output of device Y.

Second question: Do anyone have experience with this particular software or you might have another software (maybe open source) to use. If so, do you have any comments or things I need to know about this?

So you might have noticed that I wanted 5.1 audio from my 360, which means that my PC would need to have optical audio input. For this I would have to get myself a soundcard since the integrated one certainly does not meet the requirements.

Third question: What is that input-connection called and what would I have to think about when buying a soundcard? I mean I rather pay a bit more and see my product as an investment rather than buying some cheap shit making my beloved music sound awful.

So that's my problem. I would by the way love to see some feedback on my plan :)