It should work by digitally feeding the sound card without any special cables. I have no trouble getting CD audio to work, but there is a bug which I believe affects everyone with Windows 7. Tracks do not loop when they're supposed to.
Are you able to play the tracks with Windows Media Player?

Yes, Windows Media Player works with the tracks

Depending on the game, you may need _inmm.dll .
_inmm.dll : another solution for problematic CD audio?

unfortunately _inmm.dll doesn't work for frogger, even when force patching it

I found out that the music of most games work if the CD is in the 1st optical drive, that also means first if it is a virtual optical drive.
That way I got the music of Battlezone, TDR 2000, Jedi Knight and a bunch of others working, some still refuse to work though. 🙁

Do you see the drive's activity light blinking at all while the game is being played?

Procyon wrote:

I found out that the music of most games work if the CD is in the 1st optical drive, that also means first if it is a virtual optical drive.
That way I got the music of Battlezone, TDR 2000, Jedi Knight and a bunch of others working, some still refuse to work though. 🙁

This is probably the big one.

I wonder if running with Wine under Linux might help (if that's even an option for the OP)? Those 16-bit Windows 9x era games seem to like Wine a lot better than Win Vista/7.

There seems to be a bug in windows 7 regarding mixed mode discs when using certain software... many times it see's them as data or audio only and not a mixed mode CD. I've had this issue before myself. I tracked it down to being daemon tools 4.xx, uninstalling it fixed the issue for me. Still the looping problem however...

Procyon wrote:

I found out that the music of most games work if the CD is in the 1st optical drive, that also means first if it is a virtual optical drive.
That way I got the music of Battlezone, TDR 2000, Jedi Knight and a bunch of others working, some still refuse to work though. 🙁

Thank you! Now I can play Ignition with music on Win7 64.

Frogger isn't working with CD-audio even in Windows Xp.
It looks like the WinXp MCI implementation is bugged/incomplete...

I also have problems getting CD AUDIO to work in Win 7. It goes like this: The track plays fine, but then it never bothers to switch tracks or repeat the same track. And sometimes it does manage to play something next or loop what it was currently playing but then it skips every other second...

Uprising 2, Redline, and Thunder Brigade are the games I have the most trouble with getting the CD music to work...

Microsoft broke MMC, all there is to it.

Ermmm...just one question : does an image made from the Frogger cd work with cd audio?

I too faced no-cd-sound-if-not-using-1st-cd-drive-letter before, but can't remember which system it happened, but sure it was pre-7. I think it even happened in Win9x.

I managed to get CD Audio working for Warlords 3 Darklords Rising on my Win7 laptop by ripping the disc to a cue/bin image and assigning the letter of the virtual drive to D:. To get the game installed however, I first had to install it on a machine running XP and copy over the files.