In this ethnographic case study I examine, as a participant observer, the subjectivities of students, staff and others outside the university in real and virtual spaces. The work is intended for the education research community in the field of digital literacy and teaching practitioners in Higher Education (HE) who are seeking to understand how digital literacy and student engagement policy can influence relationships in learning communities. I examine the literature relating to theoretical and policy discourses of digital literacy, student engagement, learning community and social capital. Based on the literature, I take an anti-foundational methodological stance that draws on the work of Derrida, MacLure and Rancière. I also draw on the work of Fairclough who locates himself as a critical realist. While not in anyway attempting to reconcile the ontological assumptions of anti-foundationalism and critical realism, I do adopt a dialectic approach that may be generative of fresh insights and perspectives. The conflicted nature of my position as an insider and participant researcher is also interrogated. The case study of a second year (level 5) module drew on a mixed-method research approach and took place in Spring, 2012 at a post ’92 university. As the module leader, I asked the students to use online Private Group Forums (PGFs) to aid group work and Open Group Forums (OGFs) to co-ordinate activities such as field trips and to ask questions. In April, I asked the students to complete a survey that sought to measure a range of items including their engagement, levels of trust and general satisfaction with their teaching experience. After the module was completed, I interviewed students, staff and an external professional. Drawing on Critical Discourse Analysis (CDA), I analysed the content of the interviews, open and private forums and then ‘read’ them from a deconstructive viewpoint. In writing up I employ conventional and unconventional formats and, using auto ethnographic narrative, reflect on my approach. I then conclude the study, setting out the key findings. The case study showed that the majority of students did not engage with institutional virtual spaces and large numbers of students used alternatives such as Facebook to support their learning. The majority of students indicated that they trusted their tutor whom they valued as the most important source of learning support. However, tutors were, for the most part, excluded from alternative virtual spaces. Where students allowed the researcher access to their virtual space, high levels of engagement were present but these were not necessarily positive or supportive. Tutors, for the most part, did not engage with students online. Where they did, this sometimes led to dependent, disengaged student/tutor relationships. The study offers a unique insight into student and teaching staff practices in virtual and real spaces and how wider ideologically-driven policy discourses affect individuals’ subjectivities in these spaces. The qualitative and quantitative data offers a contribution to knowledge that will be useful to policy makers, Higher Education (HE) managers, teachers and students. For example, in the quantitative element of the case study, the variables of class, gender, the student’s employment status and ethnicity had no apparent effect on the interactions in virtual spaces. At the same time the qualitative data presented shows students’ use of institutional virtual spaces might not be an accurate indicator of student engagement and that the use of virtual spaces can lead to dependent behaviour by students. Policy makers and managers in Higher Education institutions might find the study’s insights and conclusions particularly helpful when considering investment in institutional Virtual Learning Environments (VLEs) and how their use should be evaluated. This study also offers a contribution to knowledge at a theoretical level. Weaving the text from virtual spaces with interviews, and reading the new text through Rancière’s (1999) ideas of politics and democracy, has important implications for how digital literacy, support and engagement are understood and how they might contribute to what I call Democratic Learning Communities in Higher Education.