Im not all that familiar with WMP but I know in Winamp if you tick that "allow surround sound" box the file you are playing still needs to be recorded in 5.1 for the effect to work. Forcing those effects usually are an option with your sound card drivers. Does seem odd the 5.1 test works in the controll panel, that says to me your drivers are working correctly. Id look for an update anyways.
This all worked before Windows 7?