Ive just done mine slightly different
Its very easy to do.
What you need:
- Microsoft HD Pack (can be found on ebay every now and again)
- Soldering iron
- Smallish phillips screwdriver
- Drill and 6.5mm drillbit
- Gold female phono socket (I use the inner colour of black, orange is also sometimes used to denote a digital input, its up to you. Bought from Maplin)
- Some wire
STEP 1: Unplug the HD Pack from the xbox. Poke a smallish phillips screwdriver through the Microsoft sticker on the HD Pack and unscrew. You could probably use a hairdryer to peel off the sticker to make it even better but I dont have one.
STEP 2: Take the sockets, wires etc out of the case so youre left with an empty case. Now put the empty case together and use a 6.5mm drillbit and drill where youd like the phono socket to go. I put mine opposite the stereo sockets as I found the gap between the stereo and component slightly too close together. I drilled at the split point so you should have a half circle cut out on each half of the case.
STEP 3 : Solder the wires as shown. Make sure they correspond correctly. Even if you do it wrong, Ive been told it shouldnt harm the xbox. It'll probably just make a nasty noise.
STEP 4: Slot the phono socket onto one half of the case, screw the nut on the phono, not too tight though otherwise the other half of the case wont fit on. Bend the "tag" on the phono socket although not absolutely neccessary. It would be a good idea to put a blob of hot-glue to the nut and body of the case to ensure it wont wriggle free.
STEP 5: Put it all together and voila! You now have digital coax out! Remember to set the audio hardware output to digital in XBMC.
See pic for clarity.
Enjoy digital bliss