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Beyond what Wayne said, if you actually have working analog audio output in your PC's back panel, I'd probably suggest using that instead of the headphone jack in the front -- that might possibly work noticeably better (and reduce clutter). No idea if it'll be worthwhile to you (at least at...

Your PC sound card doesn't have any digital outputs? IF it does, that's probably the best way to go. IF not, yeah, you can just use analog connection. Your AVR comes w/ plenty of inputs for both options, but it most likely will do its own analog-to-digital conversion, if using analog...