Correct, you can only attach one connector to the front panel pins on the motherboard. The wires from the front panel may have both HD and AC97 connectors on them, just pick the ones you want to use and plug them into the motherboard.
I used the HD connector on my old Biostar board and also on this new Gigabyte board. On my old Biostar board, you had to choose in BIOS which audio you were using, either HD or AC97. My new Gigabyte board only has HD. The pin out's for AC97 and HD are different so make sure the BIOS is set correctly. Both HD and AC97 are analog, as Erik said. The SPDIF out is digital but requires a digital reciever or amp to play sound.
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