Tony - couple of things you need to check
processor = i3 - should support HD audio formats
OS = I assume windows 7 ???? edition 32 or 64 ?
sound card = what is the make and model, does it support HD audio formats
sound card driver = is it the latest driver, does it support HD audio formats
software = XBMC - As I understand it most HTPC software will do one of two things 1) bitstream passthrough - this is where the software will pass the sound from the source straight through with no decoding 2) software decoding - the software will decode the source into a multi-layer PCM and pass it through. Not sure what XBMC does, would need to find out?
HDMI cable = assume HDMI 1.3 or 1.4
there are three areas that settings would be found 1) the win 7 sound card control panel applet 2) sound card driver software & 3) XBMC software preferences/settings
All these areas would need to be checked to make sure that the HD audio formats are fully supported and that your hardware is operating correctly. Second check the settings to make sure they are setup to output the HD audio format and not set to something like "stereo". Many HTPC builders have found numerous problems with the upgrade to Win7. Many blame the OS but most of the blame should ride with the sound card manufacture not producing solid up-to-date drivers that will work correctly. I think this should give you a good path to find out what your problem is. My initial guess would be the driver may/may not need to be updated and the settings in XBMC need to be set properly. Hope this helps some!
UPDATE: Based on some research it looks like XBMC needs a snap-in in order to output HD audio. Here is what one guy suggested. (i'm not real familiar with XBMC but this is at least one guys story)
AFAIK you need MPC-HC for that task... http://www.mediasmartserver.net/2010...layer-in-xbmc/http://www.mediasmartserver.net/2010...layer-in-xbmc/