Problem 1: The microphone jack is not the same as a line input and wont work that way.
Problem 2: The phillips sound card does not route the line input to the sound cards output. It won't work unless you route the incoming audio stream through the pc and back out using software. This isn't supported in any XM software I know of and usually has some audio quality issues. Long story short the phillips won't work for you.
Problem 3: Your line input device has the same issue as your phillips sound card, it requires software to take the audio stream as an input and route it back out to an output.
Answer: Get a sound card that has a line input that routes the audio *in the sound card hardware* to the output. I think all creative products work this way.