I had the M3d550sr so I can help a bit. It does not convert 2d to 3d on its own, but you can get a 3d Bluray player that will convert, several manufacturers such as Panasonic my players that will convert Blurays to 3d.
The set has issues with a 3d signal coming in at 1080i, so I too had to set it to 720p to get it to work. Use the SBS or TB 3d setting depending on the source...Sensio is a format that is supposed to provide better resolution but not much supports it as of now.
As for settings, turn off the ambient light sensor. Smart dimming will give you better blacks, however on my set it would cause blooming, and if I turned it off I had cloudy looking blacks screens and edge bleed...I couldn't win either way with that setting. I had most other settings like Adaptive Luma and Noise Reduction on low or off, depending on what you like.
Xbox Live gamertag: Ikari Warrior
Playstation Network ID: IkariWarrior