I've noticed that apart from the top-end cards most cards only have a simply Line In socket. However, I have seen that you can buy I/O modules that allow you to feed an optical out (e.g. Xbox 360) into the sound card via the Line In socket. However, does this allow the card to output full surround sound or will it just be stereo?

If the card is 5.1 capable it should be full surround.

If the Line In is purely analogue then it will be stereo only. And of course you would need a digital to analogue converter.

I have seen combo analogue and optical digital Line Out jacks, they have a LED at the bottom of the jack, but not a Line In version. That's not to say they don't exist of course.

Post deleted as I noticed you wanted a digital line in, NOT a line out.