Which Sound Card?

D2X.
The X fi won't do live encoding

in that case, never mind.
PS: why not the DX ?

How does prelude compare to D2X except for X-Fi's gaming effects?

The most instantly striking change from our testing is the vast improvement in both playback and recording quality under Windows Vista, which manages to take the Xonar D2X from being an also-ran to a real challenger to our current king of the sonic hill, Auzentech's X-Fi Prelude. The fact that the Xonar D2X's RightMark Audio Analyser results often better Auzentech's latest offering is a real testament to the work done by ASUS in this field, and it lands this particular part firmly in audiophile territory.

I had DX back in June and at that time the encode was n ot working for me for whatever reasons and since DX and D2X have almost the same drivers(they have the same audio processor), so I am dead set against the D2X for now. If some one can show me proof of working live encode I will back off but not until then.

Overall though, the Xonar D2X is almost a complete package, with simply fantastic audio quality, a full set of Dolby Digital Live and DTS functionality (still lacking from the X-Fi Prelude's publically available drivers at the time of writing)

Asus Xonar D2X (112£) or Creative X-Fi Titanium Fatal1ty Professional (90£)

Needs:
Toslink (Optical) or Coaxial output to connect Logitech Z-5500
DTS or Dolby Digital Live Encoding for Logitech Z-5500
Great Analog Sound for Sennheiser HD555
PCI Express 1x

Budget:
120£

Site to choose from:
Scan Computers UK: Computer Hardware - All - Sound

Great stereo sound? From consumer soundcards? Forget it...
This is the sh1t:
E-MU Systems - 1212M PCI - PCI Digital Audio System

Anyways, FYI I tested the D2X and the X-Fi Plat for stereo, and frankly the difference is not more than 10% either way. I don't know how much you'll notice, but the scales shift either way for me.