I upgraded to Version 2.4. Same results. A recap on equipment and settings:
Panny audio out via digital coax (AVP has no 5.1 ins)
Set to Bitstream audio (DD, as AVP has no DTS)
It will play DD on the menu, on the Fox advertisement, in French, or Spanish. In English, it converts to Pro Logic right after the Fox logo.
I've been into Home Theater along time, but this is kicking my you know what.