you need all 3 of the 3.5mm connectors hooked up if you want surround sound.
you are only getting stereo sound as an option because of this.
remember to set your default audio device to the external soundcard, install any software drivers for it if required and set that device to 5.1.
if your device doesnt seem to work with more than one 3.5mm plugged into it (remember to plug it into the green, orange and black (front, c/sub and rear) plugs then perhaps your external card is not working properly and needs to be replaced with something that does work. diamond is a no-name brand after all. i would however try to see if you need drivers and check all the other settings first (or try it on another pc too) to verify that it is not...