If you have the HTPC sending the audio as pcm, then the avr will be doing the decoding. If the signal is 2-channel (i.e., stereo) then the avr will display Stereo. If you have surround speakers connected, and want the avr to apply a surround mode to the stereo signal so that you get output from your rear speakers, you can hit the Standard button on the remote to select one of the surround modes (i.e., ProLogic, etc.). If the incoming signal is already a 5.1, 6.1, or 7.1 signal (i.e., DTS-HD, etc.) then that is what is going to be output and you cannot chose to have another surround mode applied to that.
LG 42LB5600, Sony BDP-S590, Pioneer VSX-516, JBL LX22, Definitive Technology ProCenter 1000, Polk DSWPro400, Polk OWM3, Logitech Squeezbox Classic, Squeezebox Radio