Does anyone know of a way I can get around this problem, so that I can use the subwoofer for Stereo audio music?
On my AVR I just switch to any one of the 5 or 6 modes meant to create that from a stereo source, like Dolby PL II Music or Logic 7. I do not try to apply this before it leaves my Mac. I'm not an expert in this, but what I've thought all along is this: it's either there, inherently, in the audio...waiting to be extracted or extrapolated by an AVR...or it isn't. It's how you have set your AVR up which determines when or if your sub will be active.
OSX Lion is configured to see the Denon as 8ch out and speaker setup is set for 5.1 surround mode.
Simmo, this has been coming up on a lot of threads lately and maybe this is part of your problem? Why are you configuring Lion to "see" the Denon in a certain way? Why not just let your Mac (and its various software players) pass stereo music from iTunes as stereo music, i.e. two channel PCM, 2ch 16 bit in AudioMIDI, and then have your Denon process it the way you want it processed--if you want it to be simulated 5.1 a la Dolby ProLogic II then let your Denon apply that...that way when you want DTS or DD 5.1 from video passed through untouched it will still be passed through because AudioMIDI should automatically switch to "encoded digital out" and pass it to your Denon untouched. Then your Denon lights up as DTS or AC3 instead of "Multi-CH IN." You're only gonna get iTunes music in the front L and front R and not the sub unless you tell your AVR to put it there, too. And that's a setting on the AVR, not a setting in Lion.
Or am I misunderstanding things?
I think its because OSX/the hardware doesn't switch the HDMI to Stereo mode for stereo sources - it just keeps it in 5.1 mode and outputs stereo through the FL/FR channels.
You can test this, keep MIDI open, when you play iTunes stereo music, what output format is displayed? It'll probably be something like 41 2ch 16bit or 48 2ch 16 bit. Your AVR should see this as 2 ch PCM. What happens to it at that point is up to you and the AVR.
Clarify this for me--you do or do not want to hear iTunes music in the L and R? That is stereo mode and that's what Lion is supposed to do with a stereo source. If you want the sub to also be active, that's up to your AVR to "create."
What I'd want to confirm is, if I were you, are other Denon owners, who have not made any changes in AudioMIDI and simply connecting to their Denon over optical, hearing the same thing and seeing the same speaker behavior, i.e. FL and FR, when they play iTunes music? What lights up for them...is there a 2 ch PCM "light" or does it also show up Multi-CH IN? You could also test this yourself, try your iTunes over optical, what happens on the Denon side processing-wise?
Perhaps un-do those "configure speakers" settings you applied and try iTunes again? Is there a difference? I suspect not, I think stereo, as 2 channel PCM, will be output the same--then it is up to your Denon to create the mix with your sub and route audio where you want to "hear" it.
DD/DTS bitstreaming/passthrough works fine and Surround audio sources also work fine.
what exactly does this mean? What software player are you using and what content are we talking about, something other than iTunes, right?
You mentioned Apple's "aggregate" device, well, there's also a new option in Lion, creating a Multi-output device within AudioMIDI, you could combine optical and HDMI out, for instance, and they'll both be active simultaneously. Not sure that'll help you but it is an option to experiment with if for some reason you can't get what you want over HDMI alone.
But the first thing I'd try is restoring all AudioMIDI settings like "configure speakers" to default, close iTunes, within AudioMIDI set output format to 41kHz/2ch 16bit, then open iTunes and play some music. Then see what happens on the Denon side.