Audio problem with cable TV through Onkyo 607

Hi,
I recently upgraded from a cheapo Sony HTIB to a 7.1 system: Onkyo 607, 7x Energy Take Classics, and the BIC H100 sub. System sounds awesome watching blu-ray, however, I have an issue with the cable TV. I have the cable hooked directly into a Samsung plasma and have an optical cable running from the TV to the receiver. When I am watching TV and using any of the processing modes (dolby or DTS) I get what sounds like voices "bleeding" from the center to all of the other speakers. When there are music swells or any action going on, the speakers sound fine. But when the scene is quiet and there is only dialog, the speakers seem to have a really scratchy sound to them, almost like a really weak radio station trying to come in. This doesn't happen when I switch to stereo mode through all speakers. Is this because the receiver isn't getting a clean signal so it's not able to properly decode the dialog? If that's the case, I don't think there's much I can do about it and can live with it since it's not really noticeable unless I'm really close to the speaker. However, if there's a possibility I may have something wrong with the receiver, I'd like to find out ASAP so I can exchange it! Anyone else have a similar experience?

The TV doesn't have HDMI out, just in. Optical was my best choice. However, you did give me an idea: when I get home I'll try to connect using the old red and white composite cable to see what happens...

I don't have a cable box. The cable comes directly from the wall into the TV; the TV has a built in digital tuner. The highest quality audio out on the TV was optical.
I tried connecting via red and white composite cables and had the exact same effect. I'm going to assume it's the cable signal not coming in clean, or maybe something is getting screwed up going from coax cable into the digital TV tuner and then out through optical? Either way, I don't think it's my receiver which was my main concern. I'm still very open to any more suggestions though

I've got the Internal Mute on so my TV speakers aren't going. So, the only audio option I have on the TV is "Multichannel";whether to use Mono,Stereo,or SAP. When I use mono or SAP, I don't get any sound from my surrounds. But, when they use the term Multichannel, it makes me think that the TV is trying to split the audio into different channels since the TV has a "surround sound" type configuration. So maybe the TV is splitting the audio up and sending it to the receiver which in turn is trying to split the audio a second time creating the distortion?