I guess you know MS's Decoder Checkup-Utility? With this you can see which codecs are on your system and which is set preferred for the MCE.
I've installed a Trial-Version of WinDVD7 and even if the Trial is expired, MCE is still able to use the codec. And I think this codec should be good for proper AC3-output (including DD and DTS etc.).
As I allready said: it works while playing a DVD in MCE (which is most important for me), but not for any other MCE-application (i. e. Live-TV, and I would like to get digital sound, too). And certainly not in the Audio-Setup of the Realtek-Chipset in Windows-Mode.
Does Windows / MCE use different codecs?
...irgendwas ist ja immer...