The S/PDIF is the digital output, the 3.5 mm jacks are for analogue audio that the soundcard has got from decoding the digital sound from a DVD for instance. The S/PDIF is an RCA socket usually coloured orange.
If you have a reciever, connect it up via the S/PDIF, but be warned that games, downloaded music etc are not mixed in digital, so unless your soundcard has Dolby Digital Live encoding availiable, then you will have to plug it into your reciever through the analogue surround passthrough, by the 8 or 6 analogue jacks on your soundcard, except when playing CD's or DVD's which have digital sound. This is because games are encoded in a format the reciever does not understand, so the soundcard has to do the decoding, although some such as Battlefront II are encoded in Dolby Digital
What reciever have you got? Does ity have analogue passthrough?