I think you did not quite get what I said. The sound from your PC should have zip, zero, nothing at all to do with your DVI/HDMI connection. When your PC is playing music, movie, game, or anything else with audio, said audio should absolutely NOT go out of your 9600's DVI out to TV, only to be returned via analog stereo back to PC.
Now, about that DVI. A 9600 does not do sound on its own, period. In order to provide video+audio HDMI output out of its DVI, it needs an external audio input. Said input is accomplished via a thin cable that connects S/PDIF header on your sound card or on your mobo to the video card. And AFAIK, X-Fi Titanium does NOT have such header. Asus M3A32-MVP, however, does - which means that your 9600 DVI is being fed by your mobo's integrated sound, NOT by the X-Fi.
What you really need to do is go into BIOS, and disable mobo onboard sound completely. Then, go into control panel and make sure your X-Fi is set as default playback device. Now, your PC sound will be done directly via X-Fi straight to speakers, without any roundabouts.
Now, PS3. Optical (as well as coax) S/PDIF by default is a 2-channel PCM stereo connection. However, it can also pass multichannel encoded formats like DD5.1 and DTS. Your X-Fi is quite capable of decoding those formats and delivering full surround to the speakers - but PS3 must send audio encoded in this format. I am not too familiar with PS3 - so not sure if it can send game sound encoded like that. However, if you connect PS3 to X-Fi via optical, pop a DVD into PS3 and select DD 5.1 (or DTS) audio track, you should get the proper 5.1 surround. You also might need to go into PS3 settings to make sure it is set to 'Bitstream' for optical output.
-----------
The entire DVI/HDMI 'sound via video card ' setup is for those who want to use TV speakers or home theater for sound output, as opposed to hooking speakers directly to their PC. I.E. my HTPC has a Radeon 4670 feeding audio/video via HDMI to my 7.1 receiver.