I keep all my outputs at 100%. It seems to me that there is a noticeable increase in noise when I increase my speaker's volume compared to using the volume control in the computer. In other words, I think the digital process introduces less noise. Peace.
No expert here, but what I've gleaned from other's comments is that you want your pc's volume to be low if your stereo's amplification is good. I.e., $100 soundcard vs. $500 receiver/amplifier w/lots of power. The logic is that the card has less power than the stereo thus increasing the volume would reduce fidelity.
When I used to plug my notebook into my receiver or JVC mini-system, I usually kept the notebook's volume low. Since both system had plenty of power (watts), it was never a problem.
I always leave my outputs set to 100%. I don't notice any difference when I bring the levels down. I'm using a SoundBlaster Live 5.1 and Klipsch 4.1 speakers.
It depends on the sound card/chip's signal to noise ratio (SNR). If it is very high like with an Audigy 2 or Revolution then 100% is good, especially if using digital output. Crappier systems like an old Sound Blaster 16 or Nvidia SoundStorm benefit from reduced volume, maybe 75%. Using an Audigy, I personally turn down and mute the inputs I do not use (the former for ergonomic considerations and the latter to maximize quality). The only ones enabled are actually Wave and MIDI (not that I generally use it but it introduces 0 noise). The CD Audio input on my system is particulary brutal for some reason -fortunately I do not use it. This way, when not playing sound, noise only just barely becomes detectable at about level 70/100 on my receiver which is twice the normal listening level (maximum comfortable level with headphones is about 40).
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