The asus cards are verry nice, the dolby headphone feature especially. First, i recommend you set your windows sound settings correctly from control panel (windows 7) .
In regards to the asus driver settings, its personal preference, some things to play with are dolby headphone - 1,2 or 3 and room size - large, medium or small (located on the effect tab)

I prefer not to use any dsp mode as they all sound bad and can cause issues with older games.
Heres my settings, the options may differ as my card is different, but alot of it is the same:

[Right click and view image to see the pictures full size]

As for in-game settings on quake, i changed nothing and dont think there is anything that needs changing. Please someone correct me if i'm wrong, i'm interested to try if so.

Nice stuff Beki! But to set up 5.1 or 7.1 sounds for Quake 3 is quite impossible. Only newest games will support this kind of hardware. You can just try to enhance the sound positioning, try this values or change to find the best for you :

seta s_max_distance "1000"
seta s_min_distance "3"
seta s_musicvolume "0"
seta s_distance "75.0"
seta s_loadas8bit "0"
seta s_compression "1"
seta s_ambient "0"
seta s_announcer "feedback"
seta s_mixPreStep "0.05"
seta s_mixahead "0.125"
seta s_khz "22"
seta s_doppler "0"
seta s_separation "0.5"
seta s_volume "0.5"

Anyway, this is not a waste of money, because you'll be good surprised by the surround sound in games like Diablo 3, CSS/CSGO, Battlefield 3 (even the 2), Farcry 3, ...
Listening to music with the ones I'm using is also a good pleasure.

I've changed the screenshot i posted. 8 chanels (7.1) sounds ok for quake and movies, but 2 channels (stereo) is far superior for music. ofc set the chanels for what you have/need.
Also, i recommend normal headphones (2 big decent drivers + surround sound emulation over 6 small lesser quality drivers). Dont bother with usb headsets.
you'll get better quality with some decent headphones are separate mic than you will from a 'gaming headset', plus overall build quality and comfort.

dunno about the distortion, personally I prefer stereo though as its more pronounced but I do struggle tell precisely where a sound is coming from. Multi channel sounds a little weaker and I find myself turning up the volume, but this is to be expected. however the effect seems convincing.

I tried this evening with 192khz with both 16 bit and 24 bit and it certainly made a huge difference but not in a good way for me, it sounds like i'm wearing some cheap iems. (ok, that is a little harsh, there does seem to be more detail but the negative effect is night and day)
All other varients sound normal. for example i tried 16/48 and 24/48 and both sound fine, but as soon as i switch to 192 or even 96 it sounds awful (both quake and music)
My music source is 44.1 KHz and i prefer the sound so this is what i use with these headphones:)

However, this was only my experience when i tested it with my 598's, i decided to try it with the 770pro too (not expecting much) but it was a whole other story. when changing between 48 and 192 the difference was nothing compared to what i experienced with the 598s, i agree there is a little less bass though. if i was using the dt770 day to day i could comfortably listen with 192/24bit, however these headphones are irritating for me to wear longer than ~10 minutes (too heavy and itchy )

I googled the difference of 24 bit sound because i was confused and came arcoss these interesting posts which cleared it up a little. Just thought i'd post them here as i leant something from them.

if your MP3 file is already sampled at 44/48 KHz then having your soundcard output to a higher rate will not make a difference anyway. If anything, it will only exhaust your soundcard/resources for no real reason.

the next quote was a bit over my head but interesting none the less.

with mp3s 24-bit decoding saves an extra level of rounding by keeping an extra 8-bits of accuracy over 16-bit decoding and thus providing a lower rounding distortion(or so I've heard). In other words, mp3s should sound better with 24-bit as long as your sound card supports it.

So, I would really recommend 24-bit playback, especially with an Audigy 2 card. There is no harm in using it! If nothing else, you'll have placebo.

After trying the different combinations and learning a little about 24-bit, i'm going to try using 24 bit, 48000Hz for a bit and see how it goes. Anything above this sounds bad with the 598's to me.