I know the surround is setup properly so now just down to pc and my motherboard is the Gigabyte z170n G1 Gaming 5 Series and I know it supports up to 7.1 surround sound. I looked into the realtek optical out properties under advanced it shows only 2 channels.
Have you downloaded the sound drivers for the motherboard?
yeah i downloaded them from Gigabytes website, I do think I remember seeing the option when I first built the computer if you clicked on playback devices and right clicked a playback device and went to advanced tab under properties, but still only shows 2 channel options.
I also just played around with it and on the tab where you can select encoded formats I already had DD and DTS selected and I played the test and it played the sounds through all the speakers and subwoofer correctly! So what am I missing here? Please and Thank You!