Any motherboard with optical or coaxial output will have the capability to pass through AC3 audio (DD and DTS) and Windows 7 Home premium is all you need to play DVD's through either Windows Media Player or Windows Media Center.
If you are playing video files in a container format like mkv using different codecs like FLAC, ogg, AAC surround, then you will need to explore software (ffdshow) to pass surround sound to the receiver.
Blu-Ray, on the other hand, will require a 3rd party player to play from BD discs. I recommend Arcsoft TotalMedia Theatre 3 Platinum. Another option is PowerDVD.
What movie format does your friend intend to play on this system?