Originally Posted by Vampidemic
This means that it can output Dolby Digital from the TVs built in tuner and/or other built in sources. The question is whether the TV will pass surround from the Blu-ray player when connected via HDMI, especially if playing a disc with a DTS soundtrack. Most Blu-ray discs seem to have DTS HD-MA soundtracks and most TVs do not have DTS decoders. This will likely cause the BD player to send a stereo PCM signal to the TV.
Vamp, I doubt the TV will (pass surround from the Blu-ray player when connected via HDMI). Capnlando, not to seem judgemental about your Sony home theater system, but I think now that you've added Blu-ray into the mix, it's limiting your overall experience and isn't well-matched to the capabilities of your TV and BDP. The home theater system looks pretty basic and easy to set up and use for enjoying DVDs and listening to SACD. And in that case, you don't need the TV to do any audio processing; it's done right in the home theater unit.
You're also able to use the home theater unit as a 5.1 receiver for watching TV, which is OK since the TV can handle the DD processing and output it to the home theater via the optical out. DD is the best you can get from most TV sources anyway.
But if you want to watch Blu-ray (and take advantage of DTS-HD MA) and/or use the BDP to stream HD content from the Internet, you're better off getting a 5.1 AVR with AV switching and relegating the home theater unit to another room or Craigslist. I love my Onkyo TX-NR509, which you can get for just north of $200 on eBay. Or scan the local or online classifieds, look for open box deals at BB, etc. to see if you can do better. I imagine the Sony speakers that came with your home theater system will work with a standard AVR. If they use special connectors just snip them off and replace them with banana plugs.