Yeah the speakers can hopefully handle stereo AND dolby digital, but that could be the culprit right there. Make sure the other 2 dangling plugs aren't resting on anything metal and short circuiting the sub. It shouldn't hurt it, but would probably try to force a 5.1 mode. (This is all in theory, mind you.)
I don't know what to tell you other than you might another sound card. More than likely that's the problem. You've got 2 options to go about it, though. You can buy a full 5.1 capable (even though it's overkill for an arcade machine) or you can buy another regular sound card (even though you won't be fully utilizing your speakers). There's no perfect answer.