Audio Setting Advice for my Equipment and Setup

I need some clarification on audio output settings for my setup and equipment.

First, my set up. I have a PS3 connected to my sharp led tv via HDMI and my tv is connected to my Bose cinemate series ii via optical cable.

My TV (assumably) supports Dolby Digital Plus (has logo on it and a digital optical out), and the bose cinemate series ii supports either PCM stereo or Dolby Digital up to DD 5.1.

My question is what is the best audio and video setup from my PS3 audio and video menu options. Right now it's set up as audio output HDMI automatic which selects Linear PCM 2 channel 41.1 and 48 kHz . Audio sounds great but I just want to be sure I'm using the best audio option. Or Should I be selecting HDMI then Manuel and checkmark dolby digital plus and DD 5.1 too since my tv supports DD Plus and my Bose supports up to DD5.1? Also should I stick to linear PCM or bitstream, not sure what the difference is? My worry is that as my audio may sound great am I getting DD 5.1 or just great sounding stereo or DD? Logic suggests to me maybe use Manuel and choose DD 5.1 and send DD 5.1 audio to TV via HDMI and the TV will send DD 5.1 audio via optical to my Bose.
Lastly I'm using the optical cable that came with Bose not sure if I bought a gold tipped optical if that would be better? Any help and advice would be great!

Thanks for the reply guys

Hmm now I'm kind of new to this whole thing. I did change the input terminal setting on TV from PCM to dolby digital, wouldn't that essentially make it a device outputting dolby digital sound? And if I connect the Bose to ps3 via optical I won't have sound trough tv unless I use RCA connectors which are only stereo.

So If I go the optical switch route how would that be set up. Would it be accurate to say leave the HDMI from ps3 to TV then optical from ps3 to bose and also optical from bose to tv via switch? and once i do this should I then change ps3 menu settings to Manual and pick DD or let ps3 automatically pick?

I wanted to test this out before I bought a switch, so I connected Bose directly to ps3 via optical (to process the DD 5.1) but I noticed the sound and picture was not in sync, any thoughts and fixes on that?

Hmm good question the only functionality I have on the remote is volume and power on/off...is there another avenue to check? Also do u think an optical switch would make that worse?