The interaction between the digital audio out, the two screens, HDCP, and PowerDVD is interesting and difficult to predict. As you use the software on your Mac, you will find that the behavior of CyberLink PowerDVD somehow interferes with the SPDIF digital audio. I'm not sure how or why, though the guess I hazard is that HDCP, controlling audio and video, messes with the audio and ties PowerDVD to a certain screen.
I have a 50" Fujitsu Plasmavision screen hooked up to the iMac as monitor two. The mini-DVI out on the iMac is hooked up to a DVI cable which then feeds the signal to the Fujitsu. Ordinarily, this works like a charm on the Mac.
On the Windows side of Boot Camp, things are a bit different. The ATI drivers and Catalyst software recognize and handle the Fujitsu fine. I haven't explored ATI's "theater mode" referenced in the Catalyst software. I'm just not sure yet what it does or how to activate it. So, I use the Fujitsu as the "second" monitor on Windows XP (one minor thing that annoys me on Windows is that the monitor is always located to the right side of my iMac monitor after each reboot -- regardless of how many times or how I try to save in ATI Catalyst that the Fujitsu is to the left of the iMac).
As I mentioned in the first post, I immediately noticed some interesting issues with PowerDVD and the two monitors.
* First, one can, contrary to my prior impression, drag the PowerDVD software between the two monitors even when open and playing a movie. Once the PowerDVD window gets about 50% of the way onto the second screen, the movie freezes, it produces large green artificats or blocks, and some rainbow blocks. But then, after a stutter freeze of about a second, it cleans itself up and restarts the movie right where it was. Again, I'm no expert in this use, just a user who experiments, but my guess is the freeze, noise, resume pattern when dragging between screens has something to do with our favorite technology, HDCP.
* Second (and this one is more odd), PowerDVD works best for me if I start it on my Mac in this way: (1) open PowerDVD on the built-in LCD monitor; (2) set audio in PowerDVD to "2 Speaker"; (3) drag the program window with the splash screen to the Fujitsu monitor; (4) maximize PowerDVD; (5) start the movie; and, finally, (6) change the audio to "SPDIF." Now, the movie is running, all is OK with the world, and one can sit back and enjoy. Varying this pattern (for example by changing to SPDIF on the LCD monitor) results in no sound whatsoever when I drag PowerDVD to the Fujitsu. Changing to SPDIF out of sequence can then result in a "We are sorry but we must close PowerDVD" error.
* Third (and this appears to related to item number two, above), if I change the audio or leave the audio in PowerDVD on SPDIF, drag PowerDVD to the Fujitsu, maximize, and start a movie Cyberlink emits a "pop" sound over the speakers and shuts down. When in doubt, I can always succeed now by opening the movie on the LCD and dragging it to the Fujitsu, you just have to not freak out over the whole artifacting / pausing thing PowerDVD does.
* Fourth, PowerDVD does not let me use the mouse to select the HD DVD menu items. To move the "pointer" and select different menu items, I have to use the arrow keys on the keyboard and return. Just an oddity. I wonder if it does that for everyone or if use Windows Mac users are so blessed.