I have tried every available driver, and i still cant get it to work.
Its a Realtek ALC1200 chip
Any ideas? Yes, I have windows audio working btw

Try this, it won't do any damage if it doesn't work: go here and download the "Vista, Windows7 Driver (32/64bits) Driver only (ZIP file)" extract it to a directory you can easily find. Then go into Device Manager and find the icon for your uninstalled audio device, right click and select "Properties", then the "Drivers" tab, then "Update Driver", and => "brows my computer for driver software" and point it to the directory you extracted the driver files to (you may have to go to a sub-directory)...

Thanks for the effort, but it didnt work either... I guess its time to invest in a new soundcard, or anything else that can send audio through optical

Have you got the audio to work under other iteratons of the Windows OS, and if so, which versions using what driver? Vista and Windows 7 drivers should for the most part work on Server 2008 R2 without issues -- your problem may be installation/registry/file corruption from exerpimenting or a bad installation. When the installation was new/clean, did Windows Update give you a Realtek audio driver option in optiona updates, and if so did you try it?

The other possibility I can think if is that if your audio hardware won't work with Realtek reference drivers at all (on any iteration of Windows), and requires propritary ASUS drivers, is that the ASUS driver installer may do OS version checking which can usually can be circumvented by extracting the driver MSI and removing the version check. You may also be able to 'fool' some driver version checks by running them in compatibility mode.

Heya!

It was a clean install, and the driver was detected on intsallation. I removed it after realizing it didnt work, and tried windows update. No cigar there either, and after that I have tried every iteration of the driver I have found.
The sound has worked on windows XP and windows home server 2003, so this fresh install is the first time it is not working.

Clear and check your event log, to see what's going on with driver installation and sound play-back... I also was editing/adding to my preveious post till a minute after you posted, so look there for more possibilities... And you're not making it very clear whether you're useing ASUS driver or Realteks...

I have tried ALL versions of the driver, including Asus and Realtek

Yes, I read that; which driver(s) worked on Windows 7 and/or Server 2003?

Windows 7: none that I know of, have not had 7 installed
Server 2003: used XP drivers

It's a fair bet that any problem you're having with the Driver on Sever 2008/R2 is also being experienced by anyone using any 64-bit version of Windows 7. Sans trying some of the trouble shooting and version circumventing steps I've recommended, I'd suggest checking ASUS forums for x64 Windows 7 User discussion for your audio.