So I finally hooked my PS3 to my upstairs TV as well. I have an HDMI Cable running directly from the PS3 to my TV for now (gonna get a splitter later). I use the optical output of my PS3 for Audio and that's hooked to my Denon receiver downstairs. I then pass the audio from the Denon optical out upstairs to my Yamaha receiver. For whatever reason I am not getting any audio through my PS3 via this method.

I know this pathway works as I have the same setup for my XBox 360. Does anyone know if there is some sort of limitation to the PS3's optical output?

And yes...the inputs are all set correctly. I DO get the audio downstairs off the Denon receiver so I know the audio is working. It's just not getting to the second receiver.