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A) Is this possible? – I believe it to be so
I don't think that there is any possibility to output the sound via HDMI and S/PDIF coaxial at the same time. From my experience, Windows 7 only allows you to choose one or the other. It may be possible that you could run coax to both receivers using a splitter, but I'm not sure if that works or not. This will not allow you to use any HD audio streams such as DolbyTrueHD and DTS-HD.
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B) Is this the best way to produce the best sound and video from the setup?
Coaxial S/PDIF will provide digital sound for Dolby, DTS, PCM, etc. Of course, it cannot do the lossless HD audio streams from Blu Ray (DTS-HD, etc.)
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C) When playing the PC through ‘System 2’ will the soundcard process the sound and put/send it to the graphics card to output it via HDMI? If not how do I set it up? I believe it can be done if not with this sound card then maybe with another, which leads me onto my next question . . .
Your Radeon card will have audio hardware on the actual card that processes the audio and sends it out via HDMI. It is capable of sending the HD audio streams for blu ray, etc. Your onboard sound (or PCI(-x) sound card) is not involved in this process at all, and usually the onboard sound must be disabled in the BIOS for your Radeon HDMI audio to work properly.
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D) If I bought the ‘Asus Xonar HDAV1.3 Deluxe’ would I then be able to connect/link the graphics card with this sound card? Is this worth buying for a HTPC, would this be much better? – note I already have the Esi Juli@ from another PC.
The ASUS Xonar HDAV was a groundbreaking sound card several years ago, as it was the only way to get the HD audio tracks from blu ray incorporated into the PC's HDMI output. In my opinion, this card is a waste of money if you have any new video card with HDMI audio on board. Your Radeon HD 6850 will take care of this for you easily, and save you a wad of cash, too.
Also, I have heard people debate otherwise, but I am of the opinion that any sound being sent digitally is perfectly capable of being sent by either a high-end sound card or an onboard audio chip with equal precision. I don't think that an add-on card (such as your Juli@, nice as it is) in an HTPC has any benefits
unless you are using the analog out (3.5mm/RCA) into a receiver. In that case, it appears that your Juli@ only does 2-channel audio for analog out.
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E) Is there a way to make both the systems play at once with different media using windows 7’s multi-screen abilities?
In short, no. You could technically show both systems with different videos no problem, but as I mentioned in section A), you can only have one sound output in Windows 7 (HDMI
or S/PDIF
or analog). Both audio streams would play on both systems. Also, if you're planning on using Windows Media Center, you can only have one instance running at a time.
The only solution I see for you is to make two different systems. Maybe you could step down the specs to reduce the price of each. If each computer is only driving one television, you can reduce the CPU to an i3 or an AMD Llano, maybe use the integrated graphics on the AMD, which would reduce power requirements, driving down the price of the PSU, etc. Just a thought. Or, you could just use your current specs to build just one system for now, as a learning experience, and then build another one later.
As for the motherboard, I tend to lean more towards ASUS or EVGA for Intel builds as they've worked out well for me personally, but I've heard good things about Gigabyte and MSI, as well.