I have been doing quite a few tests now. It is definatly a creative driver issue... I tried to uninstall all Creative drivers, with console launcher and use only the native windows drivers for USB Audio Device. I also uninstalled the AMD USB Audio Driver Filter (seems to make no difference at all). Windows now has two devices "Speakers - SB X-Fi Surround 5.1" and "Digital Audio Interface - SB X-Fi Surround 5.1". Both are working properly and the latency is gone, so this must be a creative driver issue... I am using the "Digital Audio Interface - SB X-Fi Surround 5.1" as default as I have the soundcard connected with TOSLink to a Pioneer multichannel reciever (VSX-D811). Audio is now crackle free and in sync. However with the default windows USB Audio Device driver I am unable to passthrough SPDIF Dolby Digital/DTS signals and only get a stereo signal to my reciever, if I try enable SPDIF passthrough I get no sound. There is no option in the default windows driver to set the device to 5.1. SPDIF passthrough works with the beta driver. I normally use ffdshow to enable DTS and AC3 passthrough, as the creative dolby digital live pack does not support the usb x-fi surround 5.1 (although i bought the pack). This normally works and does as well under Vista to enable DTS/DD passthrough for multichannel on movie files / DVD etc. With the beta driver installed this works as normal also on Windows 7, but i get the latency problem... With the default windows driver I have no way to set the card to 5.1 as in the beta driver, i suspect this is why ffdshow spdif passthrough of DTS/DD does not work. With the creative drivers (beta or vista) the secound audio interface is listed as "SPDIF-Out - SB X-Fi Surround 5.1". Maybe the Microsoft USB Drivers does not recognize it as a SPDIF interface? The native driver does not allow for any configuration of the soundcard, the creative driver allows one I suspect is key and it is the setup for 2/0 or 5/1 output mode. I would believe this is what makes the system identify the SPDIF as a multichannel supported port and makes passthrough in ffdshow for AC3/DTS possible. The latency seems to be definatly produced by the creative driver alone. System configuration has no impact. The creative driver seems needed for AC3/DTS to be passed through the SPDIF port correctly, but it gets out of sync. Im stuck with either no latency and stereo through the spdif with Microsoft native drivers or Latency (out of sync audio) and working DTS passthrough through the SPDIF with creative drivers. If only there were an option to select 5.1 through the spdif in native ms drivers this would most likely work. Any ideas are appriciated!