Let me expand a bit on what Joe said. If you go to the "Specifications" page on the Monoprice website for the switcher, you'll see the following in red,
"* The S/PDIF Optical (Toslink) and Digital Coax audio output formats are based on the HDMI audio output. If any of the sync devices (e.g., HDTV, Projector, etc.) connected to the output can only support stereo audio, then the S/PDIF Optical (Toslink) and Digital Coaxial outputs will be limited to PCM stereo audio. "
What they are trying to explain is that an HDMI source "senses" the capabilities of the sink device (the destination) and is only allowed to send out a compatible signal with the destination device. So, if you put a stereo TV as the sink, then the source will only generate stereo. Since HDMI only allows a single audio stream at any time, that means that there is no 5.1-channel signal for the Toslink outputs to use. So they will also send out stereo.
There is no way around this other than to either have a 5.1-channel sink or fool the source into thinking that the sink is 5.1-channel. If you fool the source, then in that case a stereo TV will provide no audio output since it wouldn't be able to decode the 5.1-channel signal.
Really what you need to do is to take the digital audio (not HDMI) outputs from each device and switch those signals and not use the HDMI signal for audio.