Digital Minijack to Digital Coax or Optical Stereo

I have a SoundMAX Integrated Digital Audio card in my IBM Thinkpad T40. There's 1 green minijack plag for the headphones and a red one for the mic. I assume that the minijack allows for a digital out and I would like to connect it it to my home stereo via a digital coaxial input or digital optical input. Is this possible and how can I do that? (is there a cable/adapter/device that you could recommend).

Is there a better way to do this... like maybe a USB connection to these digital inputs?
Your HEADPHONE output is analogue. If you want to take an audio signal from your computer through your HEADPHONE jack, get one that splits into two channels (stereo) and then plug one into an L and one into a R input on your receiver or pre-amp.

If you want to take the signal out of your computer in digital, you can take it from the USB or FIREWIRE port.

If you take it from your HEADPHONE jack, then your computer has already done the DIGITAL TO ANALOGUE CONVERSION using a cheap DAC (DIGITAL TO ANALOGUE CONVERTER) in the "dirty" environment inside your computer.

If you take the signal out of your USB or FIREWIRE port, you will get an extremely clean high quality signal and now you can do your D to A conversion cleanly, outside your computer with a higher quality DAC. Depending on how much you want to spend, you can get significant improvement over using the headphone jack all the way up to a digital front end that will compete with CD players costing thousands of dollars.

Their Aureon 7.1 Firewire has all the ins and outs you could ask for, both digital and analog, it even has a phono pre-amp built in, and a remote control so you can control it and your PC from across the room! Check their website for reviews or search the web. I have this model myself and I love it! There are "Better" (read more $$$)external devices around but for the money (and the remote) this unit is hard to beat. If you look around you should be able to find it for around $200. If you don't have a Firewire connection they also offer USB models.
Here's the url: