No output from S/PDIF - Problem solved
As I replied back to Burkhard from KPA support (thanks a lot, mate!):
"The suggestion to "Push and hold two buttons - AMPLIFIER and CABINET - while you switch on the device and directly move the chickenhead knob into PROFILER position" etc, worked and I now have the s/pdif working just fine!
One thing that you may need to know, for other users, is that since everything was initialized I did a restore from my latest backup (yesterday before I upgraded to 1.07) and I lost s/pdif output again. So I did the above process again and then I re-loaded the rigs and cabs (not by a previous backup, but by the standerd process by putting them in the Shared folder)"
I also got reply from KPA support right away and got the same instruction, which solved my issue too.
One thing to note is that this reset seems to wipe ONLY the MIDI assignment; all other rigs/amps/cabs etc remains intact.
Thanks for the prompt support!