It's as simple as it says it is. If you have it set to use ALC850, the S/PIDF works in conjunction with the Karajan audio (that extra little sound bracket that installs in the back next to the S/PIDF ports). If you have it set to NForce MCP, the NForce4's built-in audio drives the connector. If you have a digital speaker setup, and don't plan on using any other inputs/outputs like headphones, etc, and don't want to use the Karajan audio, just set it to NF4 MCP. Otherwise, just leave it set to ALC850 by default.