Diy audio receiver system under $150 ?

Hello everyone, this is my first post here. So, currently I have my PS3 (and my roomate's X-Box 360 and AT&T Uverse TV) connected through simple analog stereo cables (stretched fifteen feet across the room) connected to a sub and two very high quality powered speakers. My first question is, if I replaced the long stereo cables with optical and then had a receiver to decode the digital signal and do virtual surround sound, would that sound significantly better? even though I only have two speakers (albeit very nice ones)?

I'm guessing yes, so I started looking at receivers, all of them capable of that are $300+, I was hoping to stay under $150 (I'm a student ). My second question is does anyone know of a sub $100 device capable of taking TOSLink and doing virtual surround sound? I do not need the amplifier part, just the decoder/dsp thing.

If nothing like that exists, I started thinking about building my own. I'm a computer engineering major, so DSP circuits are nothing new. I do not really feel like designing my own on an FPGA, and I did find some decoder chips, but aparrently the suppliers will not give out the firmware to make them work unless you are a licensed Dobly company or something. So I was wondering if it'd be possible to build a PC for real cheap, and use a decent sound card that could do all the decoding and virutal surround stuff. Here's what I've found so far:

Possible sound cards:

[url=http://www.newegg.com/Product/Product.aspx?Item=N82E16829102023][/url] one bad reveiw, not sure about this one

[url=http://www.newegg.com/Product/Product.aspx?Item=N82E16829102024][/url] more expensive, but might work

[url=http://www.tigerdirect.com/applications/searchtools/item-details.asp?EdpNo=3180419&csid=ITD&body=QA#tabs][/url] it's dirt cheap. It is only 16bit, and an obscure brand (compared to Creative), so I'm not sure how easy it will be to get it working, drivers and stuff.

[url=http://techgage.com/article/auzentech_x-meridian_71/][/url] Hard to find, possibly quite expensive, but looks like the best quality



However, that's just the sound card of course. I've never built a system before, but with my degree I'm sure I can figure it out Here's my thoughts on the other components

1. Does anyone have suggestions for cheap low power motherboards/processors? possibly with integrated graphics, since I don't really need a monitor at all, except for intallation maybe.

2. Hard drive: would a small SSD help significantly with boot times? The less time I have to wait everytime I turn on my sound system the better, haha. I have a regular 250GB 5400rpm one, I could use for free.

3. Operating system: Windows or Linux? I can use either. I could use a very small linux, like DSL or Zenwalk so it boots faster, but I'm most proficient with Ubuntu. Would that present significant challenges in just getting the sound card to work right? I'm guessing Creative has better support for Windows. I won't really need a GUI, as it won't even have a monitor hooked up (except maybe for installation), so can I do some sort of remote access only deal? I've never done that before, I don't really know how it works. As a student I have free access to Windows XP, Vista, Server 2003/2008, Server Core, and of course all the free linux's.

I think that's all the parts, I have a case I'd use, it's a big old CB radio from like the 60's, it looks sweet.

Anyways, these are all my random thoughts, thanks in advance for any tips/suggestions, I'll let you all know how it turns out if I can find a way to build it cheap! my goal is under $150