I have a new Sound Blaser card on my PC, with optical In and Out jacks.
I connected the card's optical output to the optical input of a Sony MD recorder. I also connected stereo headphones to the MD recorder. Audio played on the PC is heard OK on the headphones while it is recorded on the Sony recorder. It sounds OK
Then when I play back the MD recording, it starts to play OK but the sound totally cuts out to nothing. It's intermittant. There are no error messages.
I played the MD disk on another Sony MD player. It played exactly the same way, with the audio cutting in and out. Again there were no error messages. As best I can tell there is no copy protection involved. There are also no problems when I record live speech with a microphone.