And, is it possible to convert a 2 channel audio input to a 5.1 or 7.1 surround track?
I personally haven't seen any commercial software that will produce 7.1 files as of yet. I have no doubt that one will come along soon.
In response to you second question, yes it *is* possible to convert two channel stereo to 5.1 but it all depends on you definition of surround. I have authored several DVDs with 5.1 soundtracks. The problem lies in creating the other four audio channels (LR, RR, CC and LFE).
The basic procedure I use it to take the 2 channel audio and split the left and right tracks into two mono tracks. That will give you the basic LF and RF channels. Here's where it gets tricky. In order to produce the "surround" effect for music you have to have all the original tracks that make up the final stereo image. I've never encountered a source for these outside a studio. In order to fake this, I use SoundForge to merge the left and right channels into a mono track. For the LR I set it to 80% left and 20% right with phase inversion. For the RR I reverse the 80-20 setting. It's not real surround but it fools the ear enough to be palatable. For the CC track I once again merge the left and right channels at 50% each. Then I run it through a few EQ filters to notch off frequencies above and below that of human speech. The center channel is primarily used for dialog so it works out pretty well. To make the LFE track I once again merge the L and R channels at 50% each then EQ out anything above 160Hz. Some will say there no need to notch out the higher requencies but I've found that, on my system any way, not doing so really makes the bass louder than it should be. After I get those 6 mono tracks, I load them into SonicFoundry SoftEncode to make the AC3 file.
While this proceedure will not produce a true surround effect, it's pretty good. If you have something like N-Track Studio, you can do all kinds of engineering but I've never had need to get that fancy.
Hope this helps
-wp