Let me paraphrase this slightly to get at the kernels of meaning:

• A system of morality based on relative emotional values is illusion. It is thoroughly vulgar with nothing sound and nothing true.

What Socrates is claiming is that when emotionalism is the foundation of moral choices (if it makes you emotionally happy or excited, it is right and good), then the moral choice is vulgar. Since vulgarity is the antithesis of morality, then the choice based on emotionalism is not a moral choice.

Further, a so called moral choice of this sort ("so called" because "vulgar" has just proven such choices are not moral choices), based as it is on faulty logical reasoning, is not rationally sound. If a choice or an argument or a supposition is not logically sound, then there is nothing true in it.

The association of emotionalism with moral choice is faulty logical reasoning because emotionality equates with vulgarity; vulgar is the antithesis of moral; therefore emotional is the antithesis of moral. Thus a moral decision based on "relative emotional values" is not a moral decision therefore faulty logical reasoning.

To understand Socrates (or Plato), you need to realize that Socrates' epistemology. It is only through philosophy or dialectics that a person can gain true knowledge, that is, the knowledge of the eternal forms. In this way, a person will know what true "goodness" or true "beauty" is. At this point, morality would be based on eternal things, rather than emotions, social conventions and the like. Hence, this quote really is about the importance of knowing the forms and a rejection of knowledge through other ways. 

Reason should govern our ideas of right and wrong. That is what this quote boils down to, I think, if we are willing to replace the term "wisdom" with "reason".

Reason is seen, by Socrates, to be considered, enduring and even absolute. Emotions are quite the opposite. Emotions are fleeting and short-lived and only individually or momentarily relevant. 

This line of thought presupposes a truth in reason and assumes that logical thinking contains some critical element which emotional thinking is fundamentally missing.

Ascribing this degree of relative value to reason over emotion is essential to a philosophy that relies on simple and absolute concepts to define the world. 

Basically, Socrates advocates the use of logic and sense over emotions concerning morality.  That makes sense to me, but certainly emotions have their place as well.  To leave emotions strictly out of every sort of moral decision, seems inhuman or sort of robotic.  Humanity's ability to be emotional is one of our best, endearing qualities, allowing us to make informed decisions based on circumstantial evidence at times. 

For example:  I give a student a zero because he did not turn his paper in on time. That is the school policy, so following it would be very logical.  Socrates would approve. 

But... what if the student was not able to complete said assignment because his older brother over-dosed last night?  Now I feel like a total jerk.  I would want to give the student an extension.

Socrates may shun 'relative emotional values'--but leaving them completely out sounds dehumanizing.

I agree - to allow "relative emotional values" to be the primary or only decisive influences in life reflects an alarming lack of self-discipline that may lead to self-destructive behavior, either intentional or unthinking. However, to rely solely upon wisdom or logic as a basis for determining actions and attitudes would be a very sterile existence.  There is a place and need for both in a full, rich life.

There is a more positive way to look at this, I think.  If we are ruled by our pleasures and our emotions, we are in no way free.  This goes in two directions.  If we seek only pleasure, we have no control of ourselves.  But if we shun all pleasure reflexively, we are equally controlled by outside forces (because we fear and flee them).  Therefore, it is wiser to be in control and to allow emotion and pleasure but to keep them in their place rather than letting them control us.

My feelings here, which would be considered null and void by Socrates, are that he is stating that emotions have no place in the world.

The entire quote is as follows:

There is only one currency for which all these tokens of ours should be exchanged, and that is wisdom. In fact, it is wisdom that makes possible courage and self-control and integrity or, in a word, true goodness, and the presence or absence of pleasures and fears and other such feelings makes no difference at all, whereas a system of morality which is based on relative emotional values is a mere illusion, a thoroughly vulgar conception which has nothing sound in it and nothing true.

Essentially, Socrates is stating that wisdom is the only thing which should be valued in life; given wisdom is what brings about rational emotions. Irrational emotions, like pleasure and fear, can be eliminated because they offer no value. For Socrates, pleasure and fear is vulgar, unlike true goodness, courage and integrity (which comes from wisdom).