OK to answer my own question...

The Internal SPDIF input on the Audigy2 (prob. most other cards too) is a standard SPDIF Input so should work with the Empeg digital output board. I wired it up to my spare dvd player I normally use in the bedroom to a custom cable, phono on one end and and 2pin board connector on the the other and I could get audio. Bargin.

For anyone who maybe interested, the centre pin of the phono is the white wire of the SPDIF CD/DVD PC cable, and the outer is the black.

So all there is to do now is to wire up a phono socket to a blanking plate and I have SPDIF In ready for my Empeg upgrade.

I would like to get to the bottom of the ground loop on the analogue side though, any other ideas ???

Cheers

Cris.