XPS M2010 Sound Issues

I purchased the "dongle" that allows you connect 7.1 speakers to the M2010, but the sound quality sounds over modulated and fuzzy.  I'm guessing it's got a pre amp that is pushing the sound in addition to the external. 

 

Anyone else having this problem?  I spent some change to have my office surrounded with speakers, and although the speakers on the M2010 are fine, I'd rather have the surround.

 

The other issue is that the Soundsystem I have, Creative Sound has an orange, green and black cable coming off the sub woofer but no grey side cable.  The black cable is supposed to perform this function.  On my old XPS Gen2 it worked fine with the PCMCIA SoundBlaster card installed, but with the dongle i can't configure for side speakers. 

 

Any help would be greatly appreciated.