Not getting true surround sound

The only way to get Dolby 5.1 audio out of the Xbox will be via fiber optic cable from the Xbox to a Dolby Digital amplifier - which will output a decoded 5.1 signal to a 6 channel amplifier and 5 speakers and one sub-woofer. I doubt the Logitech speaker system has a Dolby 5.1 decoder built in with the amplifier for under $100, but I can't say for sure. If the Logitech has a an optical (or TOSLink) input, connect it to the Xbox and follow the instructions below.

To configure your audio settings, follow these steps:

1. Start the Xbox 360 console without a disc in the disc tray.
2. In the System section of the Xbox Dashboard, select Console Settings.
3. In the Console Settings area, select Audio.
4. In the Audio Settings area, configure settings for analog output or digital output:
   • Analog output settings:
     • Dolby Pro Logic II: Select this setting for stereo systems or Dolby Pro Logic II-compatible systems.
     • Mono: Select this setting for systems that do not support stereo output. Note If you have connected to Xbox LIVE and downloaded any AutoUpdates, the Mono option will not be available.
   • Digital output settings:
     • Digital Stereo: Select this setting to use digital stereo output.
     • Dolby Digital 5.1: Select this setting to use Dolby Digital output.
     • Enable WMA Pro: Select this setting to enable WMA Pro pass-through if your receiver supports the WMA Pro format.

• Xbox 360 Component HD AV Cable
• VGA HD AV cable
• S-video AV cable
• Advanced SCART AV cable
• Japanese HDAV D-connector AV cable