Cancel that. I figured it out. You have to go into the Soundblaster environment setup and change from 2 speakers to 4...even though I only have 2 speakers...go figure.
Don't forget the Live has two different outputs. One output works on both 2- and 4-speaker settings, although in 4 it will only contain the "front" sounds. The other only works in 4-speaker mode, and will only contain "rear" sounds.
MikeDog, who also gets frustrated with in/out jacks in his SB Live!
