AC97 is simply the name of a "standard" Windows sound system. It only provides for one stereo recording source. Recent versions of Windows have their own drivers ready to support many of the chips used in pc audio. Intel, Avance, VIA, Crystal and C-media being common ones. The standard doesn't have to have an s/pdif input, so Windows own drivers don't support it even if the chip and card has it. Only by installing the makers own drivers will you get extra features.
We need to know a few things to help you.
Your version of Windows (98, XP etc)? If you don't know the make of Soundcard, we will need to show you how to find out, and this is different for versions of Windows.
Your make of soundcard? For all I know it isn't an AC97 but something better with multichannel drivers, in which case you should be able to pick the s/pdif input in N-track.
Have you installed any drivers or were the card and drivers pre-installed when you got the machine?
What is the choice of drivers (names) in N-track. I'm not familiar with this program, but it will be in a menu with names like Preferences, Options, Settings, Devices, Audio, etc...