I just purchased a Sony HTIB system, the HT-DDW700, got it or 100 bucks at Sears, figured it was to good of a deal to pass up. I'm hooked up through the digital optical from the reciever to the PS3. When I play games my reciever tells me I'm outputting in Dolby digital 3/2.1(what does this mean, is it not true 5.1? this is what its been saying on GTA4, i hear sound coming out all 5 speakers) but when I put a bluray in it goes to 2 channel and says PCM 48khz or something. Only way I could get it to output at 5.1 was to have the reciever change it into Prologic II. I kept checking the setting int he set up menu once in the bluray movie, to make sure enligsh dolby sigital 5.1 was selected.

Finally i went to the BD/DVD settings and went to BD audio setting(optical) and changed it from Linear PCM to bitstream, but it gave me a message that some audio fromt he BD may not be played. Whats this about? doesnt sound good. When I started up the movie this time, my reciever finally said it was playing in Dolby Digital. But i thought LPCM was supposed to be better then bitstream??? what the deal?

Also when I played music off my PS3 or trailers like 300, it plays 2 channel and PCM as well, and if I want 5 channel I have to enable Prologic II. This is the same with the XMB, except in the very begeining when I turn the PS3 on, and it makes that start up chime, my reciever says dolby digital. Shouldnt my PS3 always be outputing in Dolby Digital, even on the XMB, and in trailers?

I just purchased a Sony HTIB system, the HT-DDW700, got it or 100 bucks at Sears, figured it was to good of a deal to pass up. I'm hooked up through the digital optical from the reciever to the PS3. When I play games my reciever tells me I'm outputting in Dolby digital 3/2.1(what does this mean, is it not true 5.1? this is what its been saying on GTA4, i hear sound coming out all 5 speakers) but when I put a bluray in it goes to 2 channel and says PCM 48khz or something. Only way I could get it to output at 5.1 was to have the reciever change it into Prologic II. I kept checking the setting int he set up menu once in the bluray movie, to make sure enligsh dolby sigital 5.1 was selected.

Finally i went to the BD/DVD settings and went to BD audio setting(optical) and changed it from Linear PCM to bitstream, but it gave me a message that some audio fromt he BD may not be played. Whats this about? doesnt sound good. When I started up the movie this time, my reciever finally said it was playing in Dolby Digital. But i thought LPCM was supposed to be better then bitstream??? what the deal?

Also when I played music off my PS3 or trailers like 300, it plays 2 channel and PCM as well, and if I want 5 channel I have to enable Prologic II. This is the same with the XMB, except in the very begeining when I turn the PS3 on, and it makes that start up chime, my reciever says dolby digital. Shouldnt my PS3 always be outputing in Dolby Digital, even on the XMB, and in trailers?

Your only going to get 2 channel PCM from the optical. It can't handle multi-Channel PCM. If you want mulit-channel PCM, use HDMI. If you have no other choice, you'll have to settle for mulitchannel bitstream through the optical.

The audio that won't be played from your BD's is the uncompressed lossless formats. You should still be able to play standard Dolby Digital/DTS though. The trailers from the Playstation network are not mulitchannel.

When I play games my reciever tells me I'm outputting in Dolby digital 3/2.1(what does this mean, is it not true 5.1?This is a Sony receiver's unique way of saying "5.1".

when I put a bluray in it goes to 2 channel and says PCM 48khz or something. Only way I could get it to output at 5.1 was to have the reciever change it into Prologic II. I kept checking the setting int he set up menu once in the bluray movie, to make sure enligsh dolby sigital 5.1 was selected.That's because you're telling your PS3 to send LPCM. Optical will only send 2-channel PCM, but it can bitstream DD/DTS. Blurays are outputting 2-channel because they're sending a PCM signal instead of a bitstreamed DD/DTS track. As the above poster says, switch to bitstream and you won't have any issues.

Because you can only change the LPCM/bitstream setting for DVDs and Blurays, games are still bitstreaming DD regardless (which is why you're getting the "3/2.1" indicator on games but not movies).

it gave me a message that some audio fromt he BD may not be played. Whats this about?Most BD's can output lossless audio formats (TrueHD, DTS-MA, multichannel PCM), none of which can be sent via optical. In addition, the PS3 cannot bitstream those formats.
But i thought LPCM was supposed to be better then bitstream???not in the way that you mean. Sure, you can theoretically get a high quality 2-channel PCM track (which you could then matrix into 5.1). But you can only get a true 5.1 signal over optical if you bitstream DD/DTS. Few (if any) games or movies have a lossless uncompressed 2-channel track, so you're far better off going with bitstream.

Shouldnt my PS3 always be outputing in Dolby Digital, even on the XMB, and in trailers?No. It will only output DD when it has DD material. Game demos, most CDs, trailers, XMB are not encoded for DD. Those are all 2-channel sources.