The LCRS Encoder VST Plug-in is especially designed for Cubase SX and Nuendo. It is an LCRS 4:2 Matrix Encoder. It is not a Dolby Digital AC-3 Encoder.
It encodes 4 channels (Left, Center, Right, Surround) into two channels (stereo) for playback on Dolby Pro Logic Style receivers and decoders. If you playback audio encoded using this encoder on a normal stereo you won't hear the surround channel but instead you will hear the out of phase information that may appear to be coming from inside your head.
This plug can be used with the 5.1, 6.0, 6.1 and most other surround formats found in Nuendo and Cubase. It must have a surround channel. It is recommended that you switch to the LCRS format otherwise there will likely be unexpected results.
You should note that you can only pan a single sound at a time. This is more of a limitation with Dolby Pro Logic Decoders and not the plug-in.