Turtle Beach X41 Xbox 360 Wireless Gaming Headset $105 at eBay
Eforcity has the RCA Audio Cable Adapter for Microsoft Xbox 360 for $11 - $2 off with coupon code EFWS031523 [Exp 3/21] = $9 with free shipping. Allows HDMI video to be routed to the HDTV with the audio routed separately to the home theater system. [Compare]
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its cheaper on eBay, from the same company
http://cgi.ebay.com/Optical-Audio-Adapter-For-bacon-HDMI-AV-Cable-Gaming_W0QQitemZ300407646963QQcmdZbaconQQptZVideo_Games_Accessories?hash=item45f1b0eaf3
you will have to open it up and solder 2 points together to make it work properly. If you dont, then the xbox will reset if you decide to change inputs on your TV (ex. you are playing a game, you hit pause, you switch the input to check something on channel 7 news, you switch back to your xbox, it will reset)
here is the guide to fix it: http://forums.xbox-scene.com/index.php?showtopic=691179
the fix only takes 5 min.
Nice! Thanks for the tip, I had been using component because of this nonsense.