Thats what im going to do, but im not sure if the HDMI cable gives more quality over the HDTV cable. ( Im guessing it does though )
Nope, it does (at least) 5.1 just fine over HDMI as that's the setup I have (Xbox --HDMI--> Amp --HDMI--> TV).I understand that the xbox can only do stereo over hdmi anyway.
No, not that you would tell.
When you say HDTV lead, you are referring to the Component cable, made up of individual RGB plugs and stereo sound. That's mainly the downside, the component cable alone doesnt give decent sound output. You'd need an optical cable to go with that.
While they're coloured Red, Green and Blue, component isn't a lossless transmission method like VGA RGB signals.
http://en.wikipedia.org/wiki/Component_video
Kree I am not quite sure what you mean by lossless, as it normally refers to digital compression methods. Component is an anologue transmission method and does not rely on compression techniques. As for the XBox component will provide an equivalent of a 1080i signal whereas HDMI can output upto 1080p. Personally I find the interlacing provides a slightly softer image (using component) but it would be hard to tell in a double blind test. Go into most Stores like Currys and they wire up all of their plasmas / lcds using component not HDMI.
Just making sure that people don't read into gord's comment in the wrong way. The 3 coloured cables don't represent separate red, green and blue channels.
Component does use compression (which is definitely not limited to digital signals, S-Video and composite are compressions of component which is a compression of RGB signals), but the losses are minimal.