I know this sort of covers some of the area in this thread:
http://www.lumenlab.com/forums/index.php?showtopic=11060

But I wanted to see if anybody knew about discrete, DIY surround schematics or kits?

And not in a "4 Speakers and go" config like on the ESP site (although he does have a ton of cool stuff there.) I'm looking for a component piece that I can build myself or is insanely affordable that I can then in-line to my own amps and speakers.

In short, this would be the signal path:

((Xbox 360 with HD-DVD drive with optical SPDIF or Coax (hacked) SPDIF))

to

((*Mysterious DIY component (DD, DTS, 7.1 decode, preamp)*))

to

((multiple DIY T-amps)) (drool)

to

((homebuilt speakers.))

What's worst is that I think the actual decoder exists - the Creative Decoder DDTS-100 - about $100 in a pre-built config.

But I want more control over the signal path, and I'm not willing to pay Outlaw Audio $1000 for the privilege.

Any ideas?

Or am I overthinking this? Might it be better to do stereo audio to some nice homebuilt full-range speakers?

Many DVD players have discrete six channel outputs. I know my old first gen non-progressive sony player does.

I *think* the $39 cyberhome in my bedroom has it, though I'm not 100%. I know it has component video out, OTOH. (It also scratches DVDs with a perfect circle, stay the hell away from it, unless you make/play backups.)

I'm not sure if the convertor for 5.1 digital in (coax/opti)-> 6 analog channels out (usable signal for amplifier) is available to the general public.

I can't answer your main question (though I'm definitely curious about it), but check out this amp on ebay. I incorporated one of those into my first projector and when paired with a cheap htpc + a $5 soundblaster + the kx drivers, I was able to get 6 discrete channels at fairly good volume levels (way louder and cleaner than the t-amp).

Threads on this amp can be found here, here, and here.
FWIW...

Try using a good PC. My Desktop can output 7.1 Analog and my laptop can do 5.1 Analog. You could play DVD's on the PC but outside sources is a whole different problem. Does anyone know of a capture card that could support a surround sound input? You could also buy a pre-amp with individual outputs for the amp. Our pre-amp outputs 7.1 using either XLR or RCA. A good preamp might be the bast way to do that.

Ya,

The PC is the route to go. You can get super high quality sound this way. But you need to build a purist multi-channel line stage or pre-amp for volume adjustment so you can keep the PC volume up all the way or else you lose resolution. Some really good studio quality 7.1 cards are available for under 100 bucks. Then use the PC for everything. Run line outs to the DIY multi-channel passive line stage and then to the amps. IF you have enough good amps this set up will kill by a wide margin any A/V receiver.

The secret is to get a good sound card with high quality DAC's. You can even go as far as DIY speakers and amplifiers.

The world is open to you. There is a thread at AV forums dedicated to this approach.

EDIT:

Sorry, for some reason I skipped over the Xbox360 input part. Most kits or DIY projects of this type will be high end stuff and not cheap. PC is the cheapest route if you can find the right sound card. Doesn't the X360 have analog outputs. IF so, and you are going budget why use the SPDIF. Just go straight from multi-channel analog outputs on Xbox360 to a DIY passive line stage and amps. In fact the T-amps have built in volume control so you could go straight from X360 analog outs to the t-amps. Have individual volume control for each channel.

For inputs the PC route gets expensive. The T-amps though terrific sounding are not the best for HT. Not enough dynamic headroom. But maybe several of them would be better than a AV receiver for modest volumes. Worth a try. You could always built a cheap subwoofer to compiment the other channels with a more powerful amp. Another approach is to get a good used A/V receiver on Audiogon. Then build a good subwoofer.

Also, there are many inexpensive 7.1 cards that have SPDIF input but I think that DD and DTS input over SPDIF would be hard to find in a sound card. However, you should look around. There are a few new ones out on the market that have extensive options and good sound. And might be able to mix a DD or DTS SPDIF input and output the surround to the multi-chanel DAC's.

Not to divert you from DIYing a decoder. It can be done, but with a LOT of research. Problem is all the many different formats of surround. If you want the fun/education, then do it by all means and let us know what you build!
Using a PC solely for decoding a surround stream is not practical IMO. Again, it will work but it is overkill and turning it on and adjusting formats could be eventually a PITA. You will need to spend at the very least $200 or so on a sound card if you care enough to build speakers T-amps etc.

A better soulution is a used several year old reciever. You only want the decoding so I would suggest a bottom end Marantz or Dennon for about $250. They usually have similar front end to their top of the line models but with much lower wattage amps. This option is set and forget. The reciever will automatically recognise the format and you will have your preamp and a remote for volume/mute etc also. The amps will come in handy for surround channels too. I would consider the sound quality better than the output of an Xbox and much better than anything made by creative.

I'm a little lost here - why would I use the analog outs from the 360 if I'm looking for multi-channel surround? Either I get two channels (L / R) or I get something like ProLogic or SRS, which I'd still have to decode. And then I'm also relying on the 360's surround processor to decode the surround signal. Which might be TEH AWSOEM, as the Intertube kids say these days, but I can't know for sure.

Right?

The solution might be an older Denon or Marantz 7.1 receiver like mentioned above, but I'm really thinking about getting that Creative unit as a hack project.

Rats - the evolutionary path is laid before me in all its glory. I see the audio portion of this thing becoming a huge side project in itself!

Year 1: Start Cheap:
Use existing inventory:
32-inch Westinghouse HD LCD (please don't laugh. 8ms refresh isn't that bad if you're watching... uh.. golf)
Xbox 360
Build New Stuff from scrap:
Speaker cabinets from recycled furniture (IKEA stuff on craigslist = cheap MDF)
Full Range drivers from TangBand or even Radio Shack
Surround Decode from Ebay or DumpsterBay
DIY T-amps...

Year 2: Hack
Creative surround processor - crack open, void warranty, inspect for DIY improvements
Find similar hardware (whose surround chip is it? where else can I find it in quantities of 1?)
Build own surround processor
Publish schematic and results to Teh Intarweb as legally as possible.
Upgrade all driver to those sexy, sexy Jordans...

Year 3:
Build the projector... aw, yeah.

Damn you, Lumenlab forums...

I was under the impression that the X360 had multi-channel analog outputs. But perhaps I am wrong in this since I don't have one.

If it does, it is the least expensive way to impliment surround.

The X360 outputs Dolby prologic II on it's two channel analog outputs so you can get dolby prologic surround with an older surround AV receiver. These are the ones before DD 5.1 and many did not have SPDIF digital inputs because it was the days before DVD became big. Really good ones can be had on e-bay for 60 - 70 bucks because most HT hobbiest will have upgraded to DD 5.1, 7.1 and DTS 7.1 units in the last few years.

However, the best approach is to just flip the bill for a good modern AV receiver. Then you have total flexibility. You have DD 5.1 and 7.1 and Dolby pro logic II. I like Onkyo products the best but YMMV.

You will get the best results and flexibility for your money by doing this and then building the speakers and subwoofer yourself.

You can get a decent AV receiver nowdays for 300 - 400 USD. Try to get a good used one that's no more than two years old that has pre amp outputs and then you are in fat city. Because the amps are the weakest links in AV receivers. Then you have an upgrade path.

Also, check out this sound card in more detail. There are a couple of new cards like thi son the market and they may be able to take a DD SPDIF input and decode the signal and output it through the high quality DAC's. THen you can just use your computer to run everything. You only need external amps.

http://www.bjorn3d.com/read_pf.php?cID=1051

The omega is a great card. but if you want the best available HTPC soundcard i suggest you check out this card
http://www.auzentech.com/site/products/x-meridian.php... its expensive but this is the best sound card ive ever owned. you can replace the opamps for better ones... if the extension board or you dont want to fuss with changing opamps the omega card uses the same sound processor.

Yeah so to respond to a few things on this thread, HTPCs are great for getting around the cost of decent scalers and other video hardware, but you can get decent sound from a lot of different moderately (500-1000) priced receivers. Onkyos kick ass for consumer level, Integras, their high end are great, Yamahas, Sony, Sony ES, but those who have suggested Marantz... bad idea... from someone in the industry, they have a HORRIBLE failure rate. Not a good idea for us that dont have tons of cash to throw around. Just thought id let you know... we have a few marantz paperweights around the shop.... I wouldnt waste your time with the matrixed 7.1 systems, I have one, and its great, but if youre going to be using bluray or HDDVD (while it lasts...) it would be wise to either pony up the cash for a reciever with discrete 7.1, or just wait till the price comes down, and get a 5.1 that works for now.