Need advice on home theater set up

Hi, guys. I've developed a bit of a hobby in the past few years of slowly building and tweaking a modest set up for myself. I'm more of a geeky computer guy than an AV guy though.

My big question, though, is do I really need an A/V Receiver to power my 5 speakers?

My current set up:

Sony 46" KDL-46V5100
Onkyo TX-SR606
5 Klipsch Reference series speakers (no sub)
Home built mini HTPC
old Sony CD player
XBox 360
Playstation 3

Currently, I get basic cable TV going directly to the TV. I have the audio from the TV going S/PDIF to the receiver.
The HTPC has on-board HDMI but I'm using a Radeon 7750 with HDMI for video and sound going to the receiver.
The XBox 360 and PS3 are also HDMI to the receiver, and the CD player uses analog RCA (no S/PDIF on it.)

I've been having HDMI handshake/syncing problems on and off with the receiver for a while now, I've had it about 4 years I think. Fortunately the store I bought it from has a very generous warranty/repair/loaner policy and I got it repaired last year for similar problems.

However the problems are back in a different way now, the HTPC is only a few months old, and when I switch the receiver from TV, say, to the computer input, I don't get a sync. I have to turn off the receiver and turn it back on. Also, it intermittently loses audio sync with the PC. And on occasion the video drops and I get a screenful of noise for a second or two before the picture comes back. These problems are not really reproducible, either, some days everything's fine, other days I have nothing but problems. One thing I noticed is that web-based Flash content has the most problems with audio sync for some strange reason, whereas video from Netflix or downloaded AVI/MP4/MKVs are fine. The HTPC also has a blu-ray drive, and I've had a lot of problems with syncing video with PowerDVD 12.

Note that I rarely have problems with PS3 blu-rays, but there have been some rare sync dropping episodes.

It seems my main problem is the receiver, so I'd like to replace it. But I'd kind of like to simplify my set up if at all possible.

I've plugged all these devices into the TV directly before, and there aren't any sync problems, I just can't get audio from HDMI on the TV to go through the S/PDIF on the TV to the receiver. It seems the TV only wants to output it's own TV tuner audio or analog devices (component/composite with RCA) over the S/PDIF, and the TV only has stereo RCA output.

Is there any way I can still get "5.1" sound if I just plug all my video devices into the TV and have that output audio to some other box that powers the speakers?

Actually the store shipped it back to the factory. My understanding is this model has issues with the HDMI switching board.

Unfortunately, it looks like there's no way to do a user firmware upgrade on it, there's no serial or USB port. Also, http://www.us.onkyo.com/model.cfm?m=TX-SR606&class=Receiver&p=d says there isn't an upgrade available.

There is a YouTube video of some kid who took apart his Onkyo and replaced 5 capacitors and claims this fixed it for good. My soldering skills are not so good and I'm very reluctant to do this sort of repair work, especially because I don't really understand the circuitry of the device nor does the video even explain how he knew which capacitors to replace. http://www.youtube.com/watch?v=gj0x5S9ez5U
Edited by capran - 9/1/12 at 7:06am

Wow, was hoping to get more replies.

I've done some digging, and it looks like there are 3 receivers are on my short list. I still wish I could just get a dumb box to power my 5 speakers and let the TV do all the inputs, but I guess such a thing doesn't exist?

1. Sony STR-DN1030 http://cnettv.cnet.com/sony-receiver-built-wi-fi/9742-1_53-50127696.html
2. Yamaha RX-V473 http://www.pcmag.com/article2/0,2817,2405772,00.asp
3. Denon AVR-1613 http://www.pcmag.com/article2/0,2817,2404690,00.asp

Oh, hi. Looks like I missed your reply.

I thought about that, but the receiver only has 2 SPDIFs, using one for the TV itself, and the PC unfortunately doesn't have S/PDIF optical or COAX, just multi analog outs and HDMI. That just leaves the PS3 and 360, neither have it either but I have not had significant problems with them on HDMI.

EDIT: Actually, I take that back. It does have a S/PDIF header on the motherboard. I'd have to figure out a way to get from that to the receiver.
Edited by capran - 9/2/12 at 2:55pm

Yes, but on my model (full size with HDMI) the S/PDIF is only available when you use the clunky component adapter cable. But like I said, never have had any real issues with the 360.

But, the good news is I was able to hack together a connector for the internal S/PDIF header on the PC to go to S/SPDIF COAX and after a few hours of testing and movie watching, it works flawlessly! At first I was disappointed because the Windows Playback Devices control panel wouldn't let me configure how many speakers I had with this connection, so I assumed it meant only stereo. But it turns out under advanced properties on output formats, DTS and Dolby Digital are available and do output 5.1 sound! I then tested a Youtube video (http://www.youtube.com/watch?v=aw_XLvXF1nM) and again, distinct 5 channels of sound.

I just needed to set Windows Media Center to 5.1 channels, Plex to Digital output on the S/PDIF, and VLC to output A52 over S/PDIF.

Very happy with these results!

I reconfigured my set up and reprogrammed my Harmony remote so that the PC goes into HDMI 2 on the TV, with the Onkyo set to "TAPE" and uses COAX1. For everything else, I just use HDMI 1 on the TV and the receiver's HDMI inputs.