I didn't see this anywhere on the site, so figured I throw it up. I did a toslink install on the DC a while back.
I designed a board around the TC9231N IC by toshiba. It is now an obsolete part but can be found easily on ebay/aliexpress etc.
This board also works on the 3DO, Saturn and PS1.
I have to versions:
Surface Mount Components:
https://oshpark.com/shared_projects/kvtStGOq
https://oshpark.com/shared_projects/b9Fjt84V
All Through Hole Components
https://oshpark.com/shared_projects/dmxP90H4
https://oshpark.com/shared_projects/aCufR9Yg
Coaxial can also be used instead of toslink very easily with 2 resistors.