For analog sound, XEAR Surround Headphone is the only option that'll provide simulated positional audio. All other options are stereo only.
The part that confuses the matter is that some games provide their own positional audio simulation. In order to find out which you prefer, you'll have to experiment through trial and error. Only with XEAR Surround Headphone however, you'll be able to select 5.1 or 7.1 speaker settings in your game or the game will use those settings in Windows automatically. Do not select Headphones in your game options when using XEAR Surround.
Regarding the echo, it'll increase with the Room Size option. Your hearing will compensate. I think you'll get used to it quite quickly. In the end it'll depend on which you prioritize. Do you want to know where the enemies are or are you more focused on sound quality.