Although the audio quality will be the same whether the PS3 is set to LPCM (as it's currently set) or if set to "bitstream", if you want to see the actual decoded audio track on the front panel of the 989 (most do), then set the PS3 slim to "bitstream" via the Video Setting - BD/DVD Audio Output menu as well as ensuring all 5.1 audio codecs are checked off under the Sound Setting menu. You cannot set any Audyssey settings (Audyssey, Dyn EQ, Dyn Vol) until you run AUTO SETUP, so yes, you will want to get an Audyssey mic (avail from Denon authorized parts distributors or from ebay sellers (DM-A409 only and US sellers only)). Although if you still have the mic for your 5507 and it is a ACM1h vice ACM1, you can use that as well rather than having to buy another mic as the DM-A409 is equivalent to the ACM1h. Also, as noted in the XTR-SSA5 Owner's manual, on the 989, set all the speakers to SMALL with a 100Hz crossover if your sound bar is wall-mounted or 120Hz if it is shelf-mounted. This will then pass the lower frequencies to the sub.