How do I get 7.1 sound from my PS3 if not using HDMI for the audio? I can use and HDMI to DVI converter for the video (my processor does not have HDMI inputs). I suppose I could get 2 or 5 channel sound (based on what I read the the PlayStation site) when using that setup. But I don't see anywhere that it mentions getting more channels than that without using HDMI for the audio.

You don't, you'd need a 7.1 receiver with HDMI Audio Support.

Toslink limits you to:
5.1 dolby digital or dts, and maybe dts 6.1 ex ?
or
2 channel PCM

You don't, you'd need a 7.1 receiver with HDMI Audio Support.

Toslink limits you to:
5.1 dolby digital or dts, and maybe dts 6.1 ex ?
or
2 channel PCM

Spot on. 5.1 Dolby isn't really all that bad, I'm sure you'll get by just fine until you can upgrade your AVR at a later date.