After ages and ages of googling, reinsalling alsa, restarting I tried
this and it works again

Opened an ac3 video in xine
listened briefly
dragged an mp3 onto xine
pressed next
the mp3 played
closed xine
now my spdif works fine

might be random but hopefully... a solution

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Alsa loses AC'97 SPDIF output in Feisty
https://bugs.launchpad.net/bugs/118861
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