making the hyperx cloud core a 7.1 surround headset?

first: most 5.1 and 7.1 headsets are not actual surround (multiple drivers per ear) but are virtual surround. any headphone can use virtual surround just like them, all you need is a soundcard capable of dolby headphone or similar. some onboard has virtual surround capability but you need to look in your manual to check.

your motherboard might support 7.1 (4x 3.5mm jacks for speakers) but not necessarily virtual surround which is why you need to look specifically for that in the manual.

hxc is not a bad budget headset for the money but the soundcard on the surround model had major issues in the past and i'm not sure if they fixed it or not so often it is suggested to get the basic version and get a soundcard like the dg if you need one for surround.

did not see mention of virtual either so guessing none on motherboard.

given that the dgx is a better soundcard than comes on the soundcard model of hxc i think thats not a bad choice.

razer virtual is certainly a free alternative to buying a soundcard with either dolby headphone (asus cards) or sbx/cmss3d (creative cards). its considered the worst sounding option, but some people like it and the price is right. sbx/dh are considered better and sometimes people prefer one or the other. there are youtube test videos you can listen to which highlight the differences between them so i'd run your new headset in stereo mode on there and listen to the videos.. pick which one you like the sound of.

the difference between digital and analog: anything prior to the dac chip (digital to analog converter) meaning the game audio, virtual surround processing, sound effects, equalizers, etc are all digital processes. a complex digital signal however can not power headphones so it gets converted to a simple analog signal that speakers and other such devices can use. after conversion this signal is weak and unable to power anything so runs through an amplifier which then connects up to your headphones and powers them. in short..
pc processing -> dac -> amp -> headphone.

3.5mm to usb = cheap soundcard. if you want a dgx you dont want that.
3.5mm extender you can certainly use. while sure quality can be lost with every extra connection as long as the length is not crazy long and as long as its a decent quality shielded cable you should be perfectly fine in most cases.

i generally stick in the audio sections anymore so you will often see me around.

my viewpoint is generally that going with headphones instead of a headset is better but to each their own. stuff like the hxc for under $100 are good value. the hd518 however is cheap and if you add a mic sure gives it a hard fight. the hd558 has better more comfortable pads than the 518 so is what i normally suggest as an upgrade. the game one is if you can get it for $150-160 is also a very nice choice (its a hd518/558 + mic)

personally i do not like virtual surround myself but everyone has their own opinion here. i tried razer virtual back when it was new and it was wonky and i had trouble working with it but then again my setup is strange (i use a home theater system and headphone plugged into that.. not into the pc like normal people so thats likely what my problem was)

there is really no set place to download such music. the best of the best is any lossless or non compressed audio file type. wav, or smaller sized versions of it called flac or alac are normally best. mp4, aac and mp3 are lossy so will have quality according to their bitrate.

from my own personal experience, on cheap headphones its a moot point and i could listen to 96kbps sources (files/streaming) fine but on a decent pair of headphones (i own an m50) i personally do not like to listen to files under 192kbps (prefer 256kbps but theres not much difference over 192 to my ears just a little) and i cant listen to streams under 128kbps (prefer 192kbps). i have many files of mp3, mp4, aac but no wav/flac/alac. honestly given the huge size they take up compared to decently high bitrate lossy formats and the very little difference i hear its not worthwhile for me. some people with extremely good ears (mine are slightly better than average) might hear a big difference but i cant say its worthwhile to me given the large file sizes.

while i do not buy much music nowadays (i stream more) i have bought many from itunes (the store size and selection is truly massive), amazon mp3 (convenient if you only have android phones since itunes is not supported) or converted from cd (which are stupid priced in stores now.. $18+ i saw at a music store..)