I am no longer having an issue with IEC958 output in Karmic Koala.  I
just have to go to the Pulseaudio settings and select digital output,
and it starts outputting digital sound via my optical out jack.

@Fuss: I am not seeing any HDMI audio option in Pulseaudio, or in
alsamixer, so I'm not sure what's up with that.  I have a Nvidia video
card and the closed Nvidia driver installed and there is no setting for
HDMI audio that I can see.

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digital audio optical out (IEC958) will not unmute/turn on
https://bugs.launchpad.net/bugs/441746
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