Originally Posted by Foxbat121
If you set PCM, you will get 2-ch only for all audio tracks. That's what optical limited to.
If you want hassle free, bitstream re-encode the the best option for you.
Yep as Foxbat says, if you're using optical and select PCM you'll only get 'stereo', ie 2-channel. I use optical/toslink too, and that's what my speaker system's screen shows if PCM's selected.
'Bitstream (Re-encode)' basically 'blends' all the audio elements (inc menu sound, commentaries etc) into DTS, and yes it's theoretically lower quality.
I also have optical (note: Dolby Digital TrueHD & DTS-HD MA etc CAN'T work over optical, so the player would just switch to the standard DD+ or DTS-HD track), and use 'Bitstream (Audiophile)' simply because of the possibility re-encode is lower quality, but I freely admit I probably couldn't tell a difference with my setup.
The thing to remember with 'Bitstream (Audiophile)' is that it's ONLY the primary audio (be it DD+ or DTS-HD) - if you select a commentary track you won't hear it, as only the primary (movie) audio plays.
If you (like me) use 'Bitstream (Audiophile)' and want to watch a commentary, or PiP track, you need to go to the player setup and switch it back to 'Bitstream (Re-encode)' to get ALL audio tracks ('blended' into DTS) for that session (then switch back to Audiophile later), and in those cases you're not gonna care about high quality audio (lossless etc I mean) as you're listening to talking more than sound effects etc, so having the theoretically lower quality of Re-encode shouldn't be an issue in those situations.
Now the FIRST thing I thought of when I read your initial problem post JOgden, was that in your player settings, in the 'Audio' section, you had 'Dynamic Compression' turned ON, which it IS by default for some unknown reason. If that's on, that could well be the problem, not any of the above (though hopefully the above still helps).
What that does is keep the volume of the movie roughly the same, no matter how quiet or loud it SHOULD be. I s'pose this is if you want to watch a movie late at night and have the overall volume low so as not to keep people awake, but you want to be able to hear everything at that volume, and not have to keep turning it up and down. So, seeing as you mentioned the loud bits getting all quiet, that's why that was the first thing that occurred, that Dynamic Compression might be on.