Toslink supports 5.1, so a toslink input supports 5.1. It needs to be in the right format though - it probably accepts Dolby Digital, and might accept DTS. 5.1 channel PCM is probably not supported though, which might be the format that the 360 is outputting.
That's like saying Digital Coaxial supports 5.1, so any input that has it must also support 5.1. But that's not true, because there's an audio processor in between the data bus and the cable connector that may or may not support more than two input channels.
In fact, I'll go as far as to say his input shouldn't support 5.1. It should be able to downmix a 5.1 signal to 2.1, but that's where the format issues everyone is mentioning could come into play.