Join Date: Feb 2007
Location: The O.C. Westminster, Calif
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I googled your problem and found this:
Automatically turns the connected AV amplifier on and switches the sound output from the TV speaker to the audio system when you turn the TV on. This function is only available if you have previously used the AV amplifier to output TV sound.
Automatically switches the sound output to the AV amplifier by turning the AV amplifier on when the TV is turned on.
Automatically turns the connected AV amplifier off when you switch the TV to standby mode.
Adjusts the volume (VOL +/-) and mutes the sound (MUTING) of the connected AV amplifier through the TV’s remote control.
When connecting a digital audio system that is compatible with Audio Return Channel (ARC) technology, connect to HDMI IN 1 with an HDMI cable. If connecting a system that is incompatible with “Control for HDMI” or Audio Return Channel, an additional audio connection via DIGITAL AUDIO OUT (OPTICAL) is necessary.
That tells me ARC is HDMI1 and since your Yamaha is enabled I too am confused why this is not working...maybe you need to connect with a Digital audio out cable which is crazy...