AVS Special Member
Join Date: Dec 2008
Location: SoCal (L.A. area)
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I can see where the instructions look a bit confusing. You do not need an optical cable, either from the TV or the DVR to the soundbar. The DVR audio is going directly to the soundbar. Audio from the TV set and whatever is connected to it, passes over the ARC connection to the soundbar.
CEC is consumer electronics control. Samsung calls theirs Anynet+. I forget what Sharp uses. It allows various components to communicate status and such over HDMI. Cable and sat boxes do not support CEC, so neither the TV nor the soundbar can automatically recognize the STB, hence the manual switching.
I really don't know where the dropout problem is occurring. The optical cable won't have anything to do with that. If you have any other composite cables laying around you could try them (even cheap ones). Does the Sharp have more than one set of composite inputs? Does the DVD/VCR have any other type of output? For audio, you could take the red/white and connect directly to the soundbar, but that of course won't do anything for the video.
One last thought....since the video is dropping and that is connected directly to the TV, the soundbar isn't involved at all. My suspicions point to either the composite output of the DVD player, or (less likely) the composite input on the TV.