For surround, u should get a sound card that has hardware dolby,dts decoder.

Thanks for the replies. That's a bit of a bummer, but what I thought honestly. 
The wife knew that I had been talking about changing the setup and saw the sale on the Nu Audio card this weekend and jumped on it as a surprise. 
I hadn't fully done my research yet and was cautiously grateful when she told me.
I suppose I can always return it (not sure EVGA's policy regarding something like that) since I already have an optical out on my Z270 FTW.
So if I understand you, I won't get 5.1 audio from the optical port unless I have either a hardware or software encoder? Is that something that's currently being handled by my video card? Sorry to be thick here, but I'm not up on the PC side of surround. In home theater usually either the component handles the decoding or the receiver, the content is already encoded in DD/DTS, no encoding necessary.    
 
Thanks for the input and I'll check out the Creative AE-7 software.  
JY

For movies, u will get surround if u are using powerdvd. Other player may or may not work.
I tried kodi player and there is no surround.
For gaming, u wont get surround because u need dolby,dts decoder not passthrough.

All,
I got the chance to try out the setup as was shown above and can confirm that it does indeed work. I get the DD light on the receiver when I test the DD setting and the DTS light etc. I do only seem to be getting 2.0 on everything else. I think the receiver is automatically converting it to PLII, as I'm getting sound out of all speakers, but no indicator on the receiver display. What I'm surprised by is the visual improvement. I had everything set to pass through and game mode, but I think the receiver was adding a small bit of interference to the signal in spite of this. Text is much sharper and video is really clear. It's a noticeable improvement.
I'l have to play around a bit more to see if the trade-off of improved visuals/slightly lower audio quality is worth it until I can find a sound card that will do DD/DTS encoding. (Dolby Digital Live! is the feature I'm looking for if I understand correctly). That's not a feature EVGA is adding is it or does that require additional hardware on the card?
Not sure if I'm going to keep the card at this point (arrives tomorrow) but rest assured that no matter what I decide to do, the wife will get something nice as a thank you. She always does. Probably won't be the 2080ti FTW3 she has her eye on, but I see a Steam credit in her near future at the very least.
 
Thank you all 
JY