This video shows how to Output Component video, as well as Digital audio, through an Optical cable on a Playstation 2. Take note that the PS2 does not have in game Dolby Digital, few games actually support it, and when they do it is just for pre-rendered cutscenes. However, optical will also allow you to use Dolby Digital on DVDs, so you can get Digital Stereo or Digital 5.1 out of the PS2 that way.
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