Bitstream (re-encode) vs Bitstream (audiophile) with 5.1 receiver

[taylorw]

I have been using a Samsung bd-p1500 blu-ray player connected to a 5.1 Sony str-dh500 receiver via optical. The str-dh500 is an hdmi receiver but strangely enough does not support audio over hdmi. So I opted for optical as the receiver can decode DTS and DD 5.1 on its own.
So far I have been setting the bluray player to Bitsream (audiophile) and my receiver outputs either DTS or DD 5.1 depending on the source.
However, I cannot hear secondary audio (menu, PIP, Bonusview) unless I set the bluray player to Bitstream (re-encode) which automatically converts everything to DTS.
My question is whether it is better to leave the bluray output set to Bitstream (audiophile) and allow the receiver to decode on its own (even though its not 7.1 DTS-HD or True HD capable) or to set to re-encode which will convert everything to DTS on the fly?
Being that the receiver is not 7.1 capable in the first place, perhaps setting the bluray to re-encode would not degrade the quality much at all.
Or maybe the Audiophile setting is inappropriate in the first place for a 5.1 receiver. Does the Audiophile setting on the Samsung bluray player output 7.1 to the receiver causing loss of channels or does my receiver compensate and output all sound through 5.1?