That's right: those formats, even after being decoded to PCM, don't go out over optical.

If you'd be interested in both the HDMI audio processing and the superior version of Audyssey(MultEQ)which equalizes the sub and has more measuring positions with higher resolution filters, you should consider the 706. It's available at A4L for about $499 with free shipping. My view, which I've put into practice, is that a factory refurb has an even better chance of being trouble-free. You might try again.

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Enjoy the music, not the equipment.