Thanks for the suggestions. If I can get my hands on another blu-ray player, I'll definitely try it out, but I really don't have anything else that I can use to test.
Someone you know must have one that you could borrow for a day or a few hours. You need to make sure that your receiver is bitstreaming first or you will be troubleshooting your PC forever.
If I remember correctly, the setting for the Onkyo was something along the lines of "TV audio" or "TV sound" and it must be turned OFF or else the Onkyo will not bitstream. I know it doesn't make sense, but it was something like that which prevented my Oppo Blu-ray player from bitstreaming even though I had the Oppo specifically set up to bitstream only. All I kept getting from the Onkyo was "multi-channel PCM" until I changed that setting. I would have never guessed that it would be a problem, but some other more experienced Onkyo guys here in the forum were kind enough to inform me of this anomaly.
I know you are busy, but don't worry, we will be here for a long time, so do what you gotta do for your med studies first and when you have the opportunity, please confirm that you have bitstreaming working with the Onkyo before we continue to try to troubleshoot your PC. It will be a very frustrating experience if it turns out that you are troubleshooting the wrong piece of gear...
That being said, if you followed ricaballuh's guide at Doom9 that he linked to in an earlier post and bitstreaming is still not working, I would say that there is a good chance that the problem is elsewhere in your setup. I followed ricabullah's guide to the letter and I got everything working perfectly, so I know personally that his settings are correct.
Either that or there is something else about your PC that we do not know or even suspect from what you have told us. Even the best of the troubleshooters around here (certainly not me!) will have problems shooting in the dark.
So relax, take your time and calm down. Eventually you will get the answer - you are definitely at the right place (AVSforum)...these guys are the best!