Well, before you buy, don't let my enthusiasm sway you too far. Yes, the E-MU 1212m is a fantastic card for stereo listening and recording (and even surround recording since you can mix it later). It's hard to beat for stereo quality in a PC (as far as I'm aware, at least for anything close to the price).
If you REALLY NEED surround, the M-Audio Revolution 5.1 or 7.1 would be the ticket. But ask yourself, do you really NEED it? For music, surround usually ruins the stereo soundstage on most recordings. It's nice in games for locating sounds, and nice in some movies for the same thing, but beyond that, eh. Infact, for gaming, good headphones with a decent soundstage provide great position. It doesn't provide nearly as much of the realism that the "sound is coming from behind" as 5.1 speakers do, but good headphones with a good soundstage easily let you distinguish from front/rear. Especially if you have a card that does EAX, such as the Audigy 2. Which you can pick up for like $40 these days, new it's called the Audigy 2 Value I think. It's EAX is the same as the newer cards, sans the X-Fi (which isn't even out, and we don't know if it's any good). The Audigy 2 + E-MU card is a great gaming combo. Using the digital out on my Audigy 2 (it's a stereo mini jack, I think either the tip or the pin both carry the digital signal, I made my cable with the tip) to the E-MU's digital in (in the case of the 1212m, an RCA connector for non-optical) I basically get EAX effects in games with the sound quality of my 1212m. What you're doing is just bypassing the DAC and amp circuits in the Audigy 2 (which suck) and sending just plain old digital bits to the E-MU. Result is great...awesome sound quality, no game compatibility issues.
Anyways, I don't even know if you're doing gaming...just went on a rant there just in case. But as I said earlier, it's surround vs stereo. Then there's the question if the rest of your audio equipment would even be good enough to notice the differences between an M-Audio Revolution, an E-MU 0404 and an E-MU 1212m. Granted, the 1212m is a good investment if you're upgrading your rig later, but it's just something to think about.
Also, no, there shouldn't be any issues with your onboard sound. If you have your onboard sound plugged into a 5.1 system and your E-MU into a stereo speaker system (for example) you should be able to use them both simultaneously. As in, both playing at once, if you really wanted. Just make sure your software supports choosing audio output devices. Most decent players do. Winamp does, Foobar2000 does (oh, does it ever have output options), even WMP does I think. As for video players (like if you wanted to watch a movie in 5.1), Media Player Classic, VideoLAN, any good free player should support it. PowerDVD and other retail players should as well. You've probably seen the selection box before, except the only options were "Default" and "Whatever-soundcard-you-have-installed".
