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Hi lancer,
Short answer: PCM is simply a way of digitally storing the sound data, but it has no direct bearing on the information needed to produce stereo or surround, so if your source file is real, 2-channel stereo, you should be ok.
Explanation: Stereo to surround conversions basically fall into two categories (or a combination of the two):
1. Those that extract existing audio spatial information
2. Those that impose artificial audio spatial information
All you need to do the first is a stereo track. The spatial information is stored in a signal that is derived by "subtracting" one channel from the other (inverting the phase of one channel and combining it with the other. Sounds that are the same cancel each other out; those that are different remain).
As for the second approach, this amounts to adding artificial effects processing such as reverb. In this case, your source could even be mono and you'd be able to come up with some sort of surround.
Steve.
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