Need help with Sony PDB-S550 and Onkyo SX-806

[farslayer]

I'll admit that I'm a newbie for the most part, so bear with me if possible I bought a Sony BDP-550 last year and hooked it up to an older Onkyo receiver with fiber, used HDMI for picture directly to the TV. When I played blu-ray discs, the Onkyo lit up with "DTS" and the sound was excellent. However, with Circuit City going out of business I opted to buy a new Onkyo 806, the one with 5 HDMI inputs, and I bought enough HDMI cable to connect my Xbox 360, satellite receiver, and blu-ray player directly to the receiver. So I hook everything up and seem to either be having sound problems or I'm just not understanding the receiver.

The 360 works great, excellent picture and the receiver lights up with "Dolby Digital" and pretty much rocks the house. The blu-ray is great when I play regular DVDs; I get the same "Dolby Digital" display and all is right with the world.

Now we come to the blu-ray discs. When these play, my Onkyo simply says "MultiCh" and the PCM light is lit (I believe), the digital light is off, so I'm not sure I'm getting the best sound.

From what I've read on these forums, I understand (I think) that bitstream means the receiver should decode the sound and that PCM means that the player is decoding the sound. So I guess I'd like to know what the best settings would be for my blu-ray. I think the only options I had for audio output on the blu-ray were "direct" and "pcm", but the PCM was saying it was only two channel.

Any advice here?

thanks!