To answer your questions:
1. Yes, this board does support 6-channel (5.1) Audio : http://support.intel.com/products/desktop/motherboards/dg35ec/dg35ec-overview.htm
2. If the system crashing is occuring only after installing the Intel/Realtec drivers, then may be there is a problem with the driver. Are you using the latest drivers ? If not download and use this one if it's different from the one you have: http://downloadcenter.intel.com/Detail_Desc.aspx?agr=Y&Inst=Yes&ProductID=2929&DwnldID=16998&strOSs=44&OSFullName=Windows*%20XP%20Professional&lang=eng
If it is the same driver that you have downloaded and is causing the same system crashing issue, then can you use the driver and software that came on the motherboard cd?
3. You need to connect the jacks properly and I dont think there is any other change you need to do to retask the post. Refer to the following link for more information on retasking:http://support.intel.com/support/motherboards/desktop/sb/CS-020642.htm#6ch
The above link also provide you information of how to troubleshoot and solve audio issues on intel boards.
You may also need to update the bios if it is not upto date: http://downloadcenter.intel.com/Detail_Desc.aspx?agr=Y&Inst=Yes&ProductID=2929&DwnldID=17664&strOSs=38&OSFullName=OS%20Independent&lang=eng
Remember to always install the chipset drivers first after OS installation then the other drivers.
Please disconnect any front panel audio connector during troubleshooting audio issues and also if possible try to solve the audio issues first with XP service pack 2 then update to service pack 3 after everything is working fine. As you would notice in the troubleshooting audio issues link I have provided, in windows xp this is applicable only to windows xp with sp2 only.
Hope thes information will be useful to you.