I currently use a setup similar to what you're going for. I'd say as long as the monitor supports HDMI and 1080p, you should be fine visually. Not all games run at 1080p, but for those that do you'll get the best image possible.
The Xbox 360 does support audio over HDMI, but you can opt to use either RCA or digital audio instead if you want. All of the manuals for Xbox 360 hardware are available at http://support.xbox.com/support/en/us/nxe/hardware/manuals/InstructionManuals.aspx (although I don't see a manual for the new Xbox 360 S that was released a few months ago, but I'd guess that as far as you're concerned the Elite manual should give you the info that you need). The manuals go over the various combinations of audio and video that are supported, so hopefully that would be able to answer your questions.
For speakers, I'm currently using a 2.1 Logitech system that I've had for a long time. They meet my needs, but I'm no audiophile. I'd suggest not using your monitor's built-in speakers, since those types of speakers tend to not be very good.
I also have a Turtle Beach headset which is much better than the headset shipped with the console - both game audio and voice are sent to it, and it auto-balances the sounds during game play so that voice chat doesn't get lost among the game's audio. Since the headset is wireless, it requires two AAA batteries, but I use rechargeable batteries and they last for a long time.
As for controllers, the only time I've noticed a loss of signal is when the batteries are getting low (but then again, I'm sitting at my desk only a few feet away from the console). I've also noticed that battery life is quite good, but I use standard rechargeable AA batteries rather than the Microsoft battery pack.
From the setup guide, the X-540 looks to only have analog mini-jack inputs, and the XBox 360 only outputs 5.1 over HDMI or optical. You would need a box that takes the HDMI or optical signal and spits out 5.1 over 3 mini-jacks. I'm not even sure if the XBox will allow you to use the optical output while using HDMI, which would mean using component cables.
Having said all that, I can't find a converter box that would work for you. If one even exists, it's not showing up in search results.
EDIT: Found one thing that might work, but it's $500.
Best Answer
http://en.wikipedia.org/wiki/VGA_connector#Cable_quality
says
so your cable and monitor are likely to support high frame/refresh rates, at least 1080p@60