Ohh so your volume control isnt working, that would tell me that your setup is overriding windows sound, to use your sound card direct. It probably has somethign to do with this ac3 filter.
Spdif was just a type of output as far as I knew, im no expert though.
Well if your just using a single stereo signal to carry a Dolby encoded sound wave then the the dolby encoding is whats deciphers the signal to determine what goes where in a 5.1 system, thats the whole point of dolby. It encodes it on one end (your pc) then decodes is at the other end (your amp)
Where as if you have a 5.1 or 7.1 channel sound card then you would have a center/sub output, front l/r output and a rear l/r output. In 7.1 then you would have a 4th side l/r output. Dolby decoding would then take the sound file from the dvd and send it accordingly.
You should be using your windows sound to utilize your sound card. And I bet you thats where your problem lies. Sometimes you do want to bypass windows sound to use the sound card and most programs have built their own drivers to do so, as in the case of ASIO drivers. However for what your doing you should be AOK with windows sound.
I dont see any preferences in windows media player or VLC to choose which sound drivers to use. So I would go into, control panel > Sounds and Audio properties, under the audio tab what device is it set to use?
I would suggest to simplify all of this to figure out if you have a realtek chipset for your sound, if so its either going to use AC97 drivers or HD drivers. I would download new ones and reinstall them, hopefully that would undo this other driver set you got going on, and solve your sound issue.
Whats the make and model number of your laptop?
EDIT: Hehe laptop model is in the OP