Duffy,
Had one other thought on the audio thing with that board.
Mythbuntu 8.10 is out. It's possible that it has a later version of Alsa that may be configured properly for the SPDIF on your board. You could take an image of the current system then apply the upgrade to 8.10 and see if it fixes anything. o hard in trying. If not just go back to the previous install.
I can't really think of anything else obvious to try. Particularly when I've been told by someone with the same board that it should work out of the box
Here's a link to the
Arch wiki alsa page. Might be some things in there to try as well.
Cheers,
Arkay.