n80,
When the 'y' cable was plugged into the headphone jack, how was the Mac wired into your system?
I'm going to assume you checked System Preferences/Sound/ Output and it was set to Optical Digital Out Port.
I use this method and audio files sound fine.
When the 'y' cable was plugged into the headphone jack, how was the Mac wired into your system?
I'm going to assume you checked System Preferences/Sound/ Output and it was set to Optical Digital Out Port.
I use this method and audio files sound fine.

