Can I utilize the optical digital audio ouput to drive heahphones with a DAC?

[Mark_Bell]

I have been considering buying a new pair of headphones to listen to my music collection in iTunes on my PC and am looking for ways to optimize my computer's sound quality. I do not have any high-res tracks but ripped my CD collection into iTunes in Apple Lossless format. They sound pretty good with my current earbuds but am looking to upgrade to over-ear heaphones. But I'm not sure that is worth the investment unless I can boost my PC's sound quality.

Towards that end, I'm considering running the S/PDIF optical audio output from the back of my PC through a Digital Audio Converter (DAC) and amplifier and into my new headphones. I know it would be much easier to just plug the headphones into the 3.5 mm jack on the front of my computer, but like I said, I am trying to maximize sound quality. The problem is I don't know if this is even technically possible let alone whether or not it would result in better sound.

I have found DAC's with optical inputs, but the ones I've found on Amazon so far specify the optical signal must be in pulse-code modualtion (PCM) or linear pulse-code modulation (LPCM) format. The specs on the DAC's I'm looking at suggest they are incompatible with surround-sound signals which I believe the optical output on my PC pumps out.  

So, hence my conundrum. I am looking for advice from someone who has routed the optical digital output from his/her PC through a 2-channel DAC successfully already. But such a person is not easy to find since most people route their digital audio ouputs from their PC's into A/V receivers and speakers instead of into DAC's and headphones.

I found some general HP support information on utilizing the optical digital output here, but it doesn't address my particular problems. Any technical info one can shoot my way would be greatly appreciated as it is quite time consuming trying to research the solution on my own via the Web. Are there any audiophiles out there who have done this successfully already?