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1b1ed1a
(Get the code!)
I can also verify this exact bug on my setup. I am actually amazed that anyone else had it given the uniqueness of my setup, but great =) Similar to other posters, muting the IEC958 channel in the alsa mixer removes the distortion. I am running Ubuntu 11.04 on this computer, AD198x reported as the alsa device. Thanks for the workaround at least!