So what's the best configuration, anyways?

I really like to listen to music. That's why, for Christmas I asked for (and Santa brought) a Creative Labs SoundBlaster X-Fi XtremeMusic soundcard. And then a couple of months ago I bought a new soundsystem: Logitech Z-5500 Digital 5.1 Surround Sound speakers.

And I love them. With the X-Fi processing and the Z-5500 power, my music (and games and movies and even mundane system noises) sounds spectacular. Bass rumbles in the floor--if the subwoofer's at more than 25%, it shakes dishes downstairs in the kitchen. And every noise, from the lowest bass drum to the highest screeching tire in a movie, to the quietest whisper to the loudest bang, is clear. Distortion simply does not exist.

But I've got a question, which arises from the presence of reduntant features in the speakers, the soundcard, and the software. What settings do I enable in which component to ensure the highest overall sound quality? Let me brake it down:

1. Volume. Do I leave my speaker volume at 100%, and adjust the volume on my computer for the soundcard output? Do I leave both of them at 100%, and adjust the volume in whatever program is playing the sound? Or do I cap everything at say, 80%, and just adjust each one without regard? Basically, what volume controls should I leave alone, and what should I adjust?


2. Stereo to 5.1 Upmixing. Do I turn off the upmixing in the Z-5500 decoder, and let the X-Fi CMSS-3D engine handle it? Or vica-versa?


3. Multi-channel Decoding. Do I use the external decoder on the Z-5500s for Dolby 5.1 and DTS 96/24, or do I turn off digital bitstream out on the soundcard and let the X-Fi decoders work their magic?


4. Recording/Line-in/Microphone. This is just on the X-Fi, because obviously the speaker system is pure output (and quite powerful at that, too). Where do I adjust the input volume, on the recording level in the program, such as Audacity, or in the X-Fi's line-in volume knob, or on the microphone or amp itself?
   

Because I love my setup, but I'm OCD enough to want to get every last peanut of perfection out of it. I know both the X-Fi and the Z-5500s are great pieces of hardware, but for each of those categories, which one is better? Where do I make my adjustments: the speakers, the soundcard, or the software?

If anyone has some advice, please comment. I'm going to keep experimenting and researching, and maybe call up Logitech or Creative Labs.