I'll try to make this as step by step as possible and not skip any steps that might seem granted. These steps do assume that you have installed XBMC Live to your hard disk.
First up, updating the OS and installing the latest NVIDIA drivers.
Exit XBMC and log in to the command line. Execute the following commands:
$ sudo add-apt-repository ppa:ubuntu-x-swat/x-updates
$ sudo apt-get update
$ sudo apt-get upgrade
$ sudo apt-get dist-upgrade
With the upgrades done go ahead and restart the box.
$ sudo init 6
After the reboot exit XBMC again and log back in at the command line.
Unmute S/PDIF in alsamixer (highlight any channels that have mm and press the m key)
Exit alsamixer and back to the command line.
$ aplay -l
The above command shows output that identifies your hdmi audio output as card 0 device 3. We'll use that information in the following command when we try to play a test sound.
$ aplay -D plughw:0,3 /usr/share/sounds/alsa/Front_Center.wav
You should hear a voice say "Center" if it works. In my setup I sometimes don't hear audio for a second or so after it starts playing so I had to run the command twice before I heard anything.
If your test was successful you now know your hardware works.
Next you'll create an /etc/asound.conf file to force hdmi audio to be the default.
sudo nano /etc/asound.conf
Press Ctrl+x to exit nano and y when prompted to save the file.
Reboot your Revo one more time. At this point I was able to get sound out of videos in XBMC but I went ahead and browsed into Settings>System>Audio Output and applied the following:
Audio output: HDMI
Speaker Configuration: 5.1
Boost Volume level on downmix: *
- Dolby Digital (AC3) capable receiver: *
- DTS capable receiver: *
Audio output device: hdmi
Passthrough output device: hdmi
That's it. I really hope this helps someone. I just verified these steps on a fresh install of Dharma Live so I'm fairly certain I haven't missed anything.