If all your problem reports are that good you're not going to get much newbie hassle (although more hardware details might be good).

As for the posting in the installation forum, this is definitely post install configuration by Cecil's rules, so you had a learning experience. Just so long as you learn no one holds it against you.
On to your sound problem... Have you discovered the wiki yet?
http://www.knoppmythwiki.org/ There are a number of pages over there which seem related to your problem. Don't miss the troubleshooting section and the various HowTos. Also search the forums and the wiki for "spdif pass through" a check box setting which causes a lot of odd issues for folks.
The next step is to gather and post some diagnostic information from various utilities and logs. What does
lspci -v show for your audio card? Look for a device or devices descrbed as "Multimedia audio controller". If you find multiple devices you may have some confusion to sort out on that count. Finally a troll through the dmesg, messages, and/or syslog logfiles may turn up some interesting information related to ALSA or your audio device. See the wiki page on "CheckingLogFiles" for more information.
Finally revisit
alsamixer (searching for that will get lots of hits, scan those until your head hurts, and then take an hour or so to let it all settle) play with the interface and look up information on any devices you don't recognize. For example I've got one called "IEC958 Playback AC97-SPSA" which needs to be set to 100%.
I also think you're on to something with the device naming funnies. If the settings stuff is reverting to something other than what you set, it's probably not seeing it. I'll have to go look at it to be sure, but I think it wants a real device name there, as in something which exists in the /dev directory.
Good luck!