Emu XL-7 & MP-7 User's Group

I too was having problems with my SPDIF output.  In fact it did not 
work at all. It was a grounding issue. Here is how I fixed it. 

for this fix you will need:  about 4 inches of speaker wire. a 
screwdriver. about ten minutes.

1. open the case up like you would to replace a ROM
2. wrap some of the bare speaker wire around one of the chassis 
screws, between the two case panels (a wire sandwich) 
3. reassemble the unit
4. take the (bare) loose end of the wire and wrap it around the 
SPDIF jack
5. plug in your spdif cable tight enough that it holds this wire on. 
(you could probably solder it with no concern)
6.you're done

I havent had so much as a hiccup since doing this. 
You must ground the wire to the Chassis, the various screws on the 
back face of the unit did not work for me.