If you use HDMI to connect the player to the receiver, there's no need to set the player's audio settings. They're for its multichannel analog outputs. If you use HDMI, the receiver can apply its various digital processing functions to the audio, including bass management and Audyssey room correction. That can't be done if you use the multichannel audio connections. Audyssey can make a substantial improvement to the sounds you hear.
p.s. to be more specific:
You should let the receiver do any Neo6 and bass management.
When you bitstream the audio, the receiver has to decode it from Dolby or DTS into LPCM so it can process the audio signals.
When you select PCM output, the player decodes the audio to LPCM and can mix in a disc's menu sounds and secondary audio tracks.
Bitstream (reencode) is normally used when the player decodes the disc's audio so it can mix in the menu sounsd and secondary audio tracks, and then reencodes it so you'll get multichannel audio over the S/PDIF connections.
When using HDMI, you should use Bitstream (Audiophile) if you don't care about secondary audio and want to see the audio decoding lights on the receiver itself, Otherwise use PCM output. There is no quality difference between the Bitstreamed and PCM audio in modern players.
Marantz SR7009 avr + MM9000 amp --> Atmos 7.1.4
Fronts=NHT 2.9+AC2, FH+TM=DefTech PM1000, LCR+TM amped