I've been searching around for an answer and I think I found it but I'm still stuck. Anyone else not able to play their PS3 Blue Ray discs with their home theater system with 5.1 Surround Sound? I get normal stereo. I don't have an HDMI output on my receiver, I found this board that answers the question but i don't know what heck they are talking about. I go into my sound settings but I don't see what they are speaking of:
"You need to set the BD/DVD Audio Output Format (Optical) to Bitstream to get 5.1 from Blu-Rays. You wont get Dolby HD or Dolby LPCM or DTS-HD sound with an optical cable but you will get the core 5.1 surround sound."
I believe the PS3 default audio is set bit PCM, which, if you use an optical cable, won't produce DD. You have to change it to Bitstream. It made sense once I figured out what to change, it just took some hunting through the PS3 online manual to understand what to change.