I can't find its software for windows 7 so installed the XP one.
That would do it.
First and formost, C-Media doesn't sell soundcards; they make the chip that other brands use. What is the exact make of the soundcard?
I connected my 5.1 surround sound system to it using Stereo RCA cables. One to the green and other to the blue but nothing happens
Because they are different hookups. Home Theatre systems use RCA connections, PC systems use TRS. Simmilar jack sizes, but different output formats. You need to connect using TRS to RCA converters to use a home theatre system properly.
Also, you can't just randomly use different colored jacks; they all have an assigned purpose. Green is front stereo out, pink is microphone in, blue is line input, etc.