Pleeease help out...

I recently bought a Yamaha HTIAB and I connected my PS3 to it. The only thing is that I thought the uncompressed audio would be down converted to DTS 5.1. I connected it with optical cables and it shows on the receiver that the source is 2 Channels only... I want surround sound! How do I do this? I thought optical cables could give you surround sound?

Only the HD-DVD players downconvert High Def audio to DTS. When you're listening to the PCM track on a Blu-Ray disc, Optical only has the bandwidth to carry 2 channels of PCM not the full 5.1. You'll only be able to send PCM over HDMI. I'm not sure about Dolby True HD maybe someone with a PS3 can shed light on what happens to that over optical.
All Blu-Ray discs have the regular dolby digital track which will work fine over optical. The dolby digital track is still improved over regular DVD as it has a bit rate of 640 KBPS.

[Post edited by Movielover316 on Jan 18, 2008]

I connected it yesterday and right now Im testing it with Close Encounters on Blu-ray. It has a DTS-HD and a TrueHD track, but no matter which one I pick, it only shows up as 2 Channels. Am I losing the surround effects or do all the effects still come out of the 2 front speakers?

And now I put in the Pirates: At World's End Blu-ray and picked the Dolby Digital track and it still shows up as 2 Channels only...

Check your settings, make sure you have you're Optical or S/pdif output set to bitstream. NOT PCM. Other then that I'm not sure. I don't own a PS3, maybe someone who does can help.

Movielover is correct, HDMI is the only way to get LPCM 5.1 or any HD audio codec since the PS3 does not have analog outs you will need a HDMI processing reciever. A regular HT reciever will only process LPCM 5.1 as 2 channel. In the language setup and/or audio setup on your disc you must chose DD 5.1 or dts 5.1. DO NOT chose LPCM.

[Post edited by tony1569 on Jan 18, 2008]

Yeah, I chose Dolby Digital on Pirates and it only used the 2 front speakers. I also put in Revenge of the Sith on standard DVD and the 5.1 Dolby Digital worked perfectly. Does this mean that I cant get 5.1 DD on Blu-rays? It should work the same as DD on a regular DVD, no?

First off are you using a PS3? Please forgive me if I didn't catch that earlier.

If you are change the BD Audio Output Format (Optical Digital) to Bitstream.

Yeah, I connected my HD-A3 DVD player with optical and I get 5.1 with HD-DVDs and DVDs. Then I connected my PS3 with optical but I want to get 5.1 DD on my Blu-rays. I select the 5.1 DD track, and the receiver says that the source is 2 channel PCM still. On the PS3 settings, I cant deselect the PCM options, they are preselected as formats that the receiver accepts...