Dear Mike,
I am so sorry that your "first" attemps to make something of today's digital offerings don't work out as intended.
But Russ is right, look here :
http://www.rogueamoeba.com/support/knowledgebase/?showArticle=AirfoilWinWASAPI(I only have no clue what option C in there means, but I guess that says "don't use it"
)
For XXHighEnd indeed only Exclusive Mode is possible. This means WASAPI (Engine #3) or Kernel Streaming (Engine#4).
Before there were Engine#1 and #2 and they were DirectSound based (option A behind that link), but it really isn't for the better. So, that is about the dreaded "bit perfect" thing bascially, and although it is not the most important of all, I dropped those Engines because of the far more poor sound.
Indeed it will be so that an application like Airfoil won't incur for the best sonic qualities, which is for several reasons. One of it is WiFi which is needed (well, that assumed) which is "devistating" to the sound. Hard to explain in brief, but this is all about what the Operating System has to do in order to get things going. The internal communication with something like Airfoil is one of them, and you really shouldn't apply it were it for the best sound.
But hey, what is the big deal anyway ? I mean, if you can't get this going for what you so nicely intended (and a LOT of nice things can be done via the ApplTV alone !), why not use any other player to your likings for this application ? I mean, if the SQ doesn't matter so much anyway ...
Right ?
Later you can always setup something really good around a real good player. Really much can be achieved, and the next version (0.9z-6) goes further again.
So yes, XXHighEnd was made for the best sound possible, and all the good guys in here, like Russ, always helped and help to improve. If something is wrong or things went lesser, there's always someone (or everyone) to shout outloud I did something wrong, or should improve on something anyway.
Will count for you too.
All the best for now !
Peter