From their FAQ:
S/PDIF In & Dolby Digital:
Q: Can the S/PDIF In accept a dolby digital signal and translate it? The
site only mentions it can handle 16 bit/48 kHz but doesn't specifically
mention whether it can handle more than PCM encoding (DD or DTS)
A: The Montego DDL will allow you to pass through a multi stream digital
signal. It will also encode to Dolby Digital 5.1 in real time. The card
will not decode Dolby Digital data. This must be done externally either
in your speakers, A/V receiver or stand-alone decoder.
So, nope, wont work.
EDIT: There are some devices that will do this though. Creative has their DDTS-100, but it's hard to find and quite expensive.
You could also get "fake surround" going if it's not a big deal for you. There are adapters that would allow you to get stereo sound played out all your speakers.
If you're really into sound, you might think about taking the fist step towards getting a "real" system together. Getting a receiver with multichannel input would allow you to hook up your computer through analog and then the 360 through digital.