Thanks for the reply. I've set up as 3.1 and get the static/distortion in the L and R. When I play music in stereo, it's still the same issue, but less acute. (That's why I was thinking it was something to do with the Dolby processing or other effects. If I switch from stereo to other settings, it magnified the problem, but perhaps it has more to do with the channel than the processing.) Should I try a 5.1 setup and see what happens, or won't that matter?
I've reset the processor about 5 times in a row. Leaving it unplugged for awhile and going to reset again as a last resort.