I was able to get optical sound working by following this guide:
https://help.ubuntu.com/community/HdaIntelSoundHowto

If I add the line

options snd-hda-intel model=6stack-dig

to /etc/modprobe.d/alsa-base.conf, the SPDIF sound works again. So I'd
guess that the autodetection of the sound card model somehow broke in
2.6.35-25?

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https://bugs.launchpad.net/bugs/704401

Title:
  Optical sound output breaks on upgrade to linux-
  image-2.6.35-25-generic

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