I have run alsaconf and the onboard card is detected and configured. Alsamixer has the sliders all up but still no sound from the digital output from the sound card. The system works fine with Windoze XP. Anyone any ideas?

Firstly, please make sure the speakers are on and not choked down. Turn them up and down and listen for noise. Hear noise - that's good. Just in case...
Second. Is it the only sound card in the system? Do you have on-board sound? If yes the simplest way to solve the problem will be disabling it in bios or setting its to card0 in configuration file.
Third. Run lspci and dmesg as root and post output here.
I am not a guru definitely but that was what I'd started with.

It is an on-board sound card. It works great with Win XP but not with 2008. I even tried a SB live card but it would not work either! Part of the problem is the Boston Acoustics only work with digital output.

OK Ive narrowed the problem down. Analogue output works fine but the digital output is not, but where is the switch?

Oh, that's better! On Ubuntu I just double click on sound icon and go to properties and select what switches I want to use. I found it depends on model of sound card so one card in the same "properties" window will have bigger number of switches and one - less of them. So it depends on driver I guess.
On SuSE I did it through YaST, there's a little button above final OK button (very dumb location to place it I can tell you).
Obviously you have firmware and driver support if you can get an analog signal.
You may want to try to use another sound manager as well.

If you use KDE, open kmix (open the mixer if needed then click the Switches tab.

HTH,

Tried all that, there is actually no switch for analogue/digital that is the problem

Working. I installed the latest alsa drivers, ticked the IEC958 button and now have sound.

I think that I have the same problem as you, but I am on the current ALSA driver according to alsa-project.org and /proc/asound/version.

cat /proc/asound/version reports: Advanced Linux Sound Architecture Driver Version 1.0.15 (Tue Oct 23 06:09:18 2007 UTC).

aplay -l reports:
**** List of PLAYBACK Hardware Devices ****
card 0: ICH7 [Intel ICH7], device 0: Intel ICH [Intel ICH7]
Subdevices: 1/1
Subdevice #0: subdevice #0
card 0: ICH7 [Intel ICH7], device 4: Intel ICH - IEC958 [Intel ICH7 - IEC958]
Subdevices: 0/1
Subdevice #0: subdevice #0

The command "amixer -c0 | grep control" does not report any IEC958 controls.

Did you install a beta driver, or do I have different hardware than you?

Success!

I found that other people were using snd-hda-intel and Fedora 8 decided to load snd-intel8x0 instead. So I changed /etc/modprobe.conf
alias scsi_hostadapter libata
alias scsi_hostadapter1 ata_piix
alias scsi_hostadapter2 usb-storage
alias snd-card-0 snd-intel8x0
options snd-card-0 index=0
options snd-intel8x0 index=0
alias eth0 et131x

to

alias scsi_hostadapter libata
alias scsi_hostadapter1 ata_piix
alias scsi_hostadapter2 usb-storage
alias snd-card-0 snd-hda-intel
options snd-card-0 index=0
options snd-hda-intel index=0