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EDIT: I have one of these cables that came with my 360, can I use the HDMI for video and this for the audio? I dont really want to hack my HDMI cable...
yes sir thats what its made for, I take the stereo audio out from that dongle thing to a stereo to headphone cable to the "line in" on my pc and get audio through my pc speakers.
If you have a good sound card with "optical in" or even "spdif in" use the optical jack on the dongle instead.