PS3 and Audio Set-Up/Issues

[vig13]

Ok everyone, still new, but need HELP.

Current Set-Up

HDTV: Sony KDS-R60XBR2 60" SXRD 1080p XBR
Blu Ray: PS3
Receiver: Sony STRDE-985 (non-HDMI)
Surround: Bose Acoustimass 16

I am having some sound issues with my current set-up. I am running HDMI for video from PS3 to TV. I am running optical cable from PS3 to receiver for audio.

Whenever I set the PS3 audio to bitstream, I get numerous "blips" or "cut-outs" from my receiver sound, which is incredibly intolerable. Does anyone know why this is happening? The sound just goes silent for a second and then everything will be fine, then it will just happen every now and again.

Now when I set the PS3 audio to linear, the sound is fine and I don't get the same "blips" or silent pauses at all, but I don't think that I'm hearing my best audio option when set up like this. Is this true?

Also - if I want to watch a BluRay disc that has DTS, do I have to have the PS3 audio set to bitstream?

As you can all see, I need a ton of advising. Thanks