As the official HD AV cable is a bit pricey, I'm considering modding my 3rd party component cable to output digital audio instead of (or in addition to) the normal stereo. According to this pinout it should be as easy as adding wiring a coax connector to pin 3 inside the AV connector. I'd like to keep the stereo output as well, if possible. Anyone done this before? Will the Xbox output both analog stereo and digital sound simultaneously?
It might be wise to add another port for coaxial rather than attempt to modify your current cords just so you're not always reliant on having those special cables. It's pretty easy to do. Drill a hole out of the back and run wires from the underside of the video connector to a phono/RCA plug sticking out the back. Here's some diagrams that I've been using for a while: http://imgur.com/a/8wtGf You could use your current cable and just run different signals to the audio output, making it into a digital coaxial signal, but I'm concerned it would feedback a digital coaxial signal back into the Xbox motherboard and I don't know what that might do.
