I've been searching for a solution for a few days and I haven't found anything that's helped.
I have a 60GB Xbox 360 Pro, an Onkyo HT-R390 A/V receiver, the Onkyo speakers the receiver came with, and a 47" LG LCD. The 360 connects to the receiver via HDMI, and the receiver is connected to the display via HDMI. When I select Dolby Digital 5.1 in the audio settings on the 360, the Xbox Guide sounds dissappear (like the noise when you move up and down in a menu), and some sounds in games dissappear. I'm mainly trying to make it work with Halo 4, and in the game the menu sounds don't play, the footsteps, reloading, switching weapons, and armour abilities all don't play. It sounds like the game is being played underwater.
When switched to Digital Stereo on the 360, the receiver is set to play 2.0 in 3.1 and all of these sounds come out of the center speaker, so the speaker isn't the problem. I've tried factory reseting the receiver, I've reset the display settings, turned off Display Discovery, and tried the Optical Out on the component cable with the 360. None of this solves the problem.
The receiver's Dolby Digital light lights up when the 360 is on and set to 5.1, and the receiver recognizes it as a Dolby Digital 5.1 channel signal in the audio info menu, and every other speaker works normally. The center speaker plays sounds like gunshots fired, but not sounds like a jetpack or warthog turret nearby. Any other ideas to try? This is really frustrating!
EDIT: Ive also tried other HDMI cables, other HDMI ports on the receiver and TV, and both optical ports on the receiver when testing from the component cable. I also tried connecting the 360 directly to TV with an HDMI cable, and then using an optical cable for audio to the reciever. This worked, but it's in 2.0 PCM. =/