From the ALSA wiki
Configuring XMMS with ALSA for digital output (spdif)
- from XMMS Options->Preferences (Ctrl P), select the tab "Audio I/O Plugins"
- in the box "Output Plugin", select the "ALSA 1.2.8 output plugin [libALSA.so]" and press the "Configure" button
- in "ALSA Driver configuration", click the checkbox "[x] User defined:" and enter spdif instead of default
- leave the "Mixer card:" set to "0", and "Mixer device:" set to "PCM"
This will select the digital output for the soundcard and now XMMS will send the output to ALSA's digital output. Only stereo tracks work at the moment, for some odd reason mono tracks won't play.
You can use XMMS with a plugin to play MIDI files.