Xbox 360 changes output signal on DVD films?

[Whistler]

I recently bought an Xbox 360 Premium with VGA cable to hook it up to my projector. I use the optical Toslink for digital sound and it works great, the sound is flawless. In games that is... When I put a DVD movie in the tray I lose the sound, I just get a static noise.

This is the setup I'm using:

Xbox 360 -> Toslink -> M-Audio Super DAC 2496 -> Balanced XLR -> Perception Audio Sansaar (analogue two channel amplifier)

In the Xbox console settings menu I've chosen Digitial Stereo. The two other options (5.1 and something like WMV) gives the same static noise as when I load a movie DVD, which makes me believe that the Xbox changes automatically from Stereo to 5.1 when I want to watch a movie.

I've been using this set up for years with regular DVD players with perfect sound (if there is such a thing) and I (read: my girlfriend) wants to get rid of some of the boxes in "the stack" which lead me to look at the Xbox as a combined entertaining system (after all, who doesn't want to be a Guitar Hero?)

Thankful for any responses!