At last it worked for me! I did try this scenario before but I realised that I had to restart cablab4 after making changes to inputs-outputs.I have a similar setup, using SPDIF into an RME UCX II, and my monitors are connected to the RME UCX II output. My guitar is connected to the front instrument input on the Axe-FX III. Here are my settings in Cab Lab.
Output device: RME UCX II
Input device: RME UCX II
Active output channels: Analog 1+2 (monitors are connected here)
Active input channels: SPDIF L+R (Axe-FX III SPDIF output is connected here)
Click the Connect button at the top and select the Axe-FX III.
Then in the lower-left Audition area use SW Live Mode. Click the gear icon that shows up to the right SW Live Mode. Click the "Do It!" button in step 3.
Make sure on the Apollo 8 mixer that you are not monitoring the SPDIF input live. I usually have it set up that way so that I hear the Axe-FX III through my monitors. Disable/mute that if you do the same, otherwise you'll hear both the Axe-FX direct sound (which now has the cab disabled) and the Cab Lab output at the same time.
Also I had to mute the spdif input signal.