AES/EBU as an input?

I have no experience with AES/EBU or S/PDIF technology.  In what application would I use these?

Basically, I'm trying to maximize my input into my VS-700.  I tried running the AXE FX II into the AES/EBU through an XLR cable; it worked, but the tone was very noisy and distorted.  

I have an 8-channel preamp in through the ADAT in addition to the 8 pre-amps on the VS-700.  I also have the auxiliary on the board.  Is 17 simultaneous channels the only option?

Thanks!