Well, the standard media player in Win7 is Windows Media Player (WMP). I'm looking at it now: on the Devices tab under Options, you can select the output device and change its settings. If you hardware and its driver support S/PDIF (as it should) then you'll see that option there. In my case (no digital out) it has fewer options.
If you like your media player more stripped-down than that, I can recommend
VLC, though I think WMP is nicer for CDs (since it downloads track names etc). But you could use
any CD player software, since the output selection is a Windows 7 setting, not something the program itself would need to worry about. The same is true of DVD players: the bit you see is just a "front end", while the "back end" that does the work is normally out of sight.