If a device supports Dolby Digital (AC3) then thats all there is to it. There is no other level of compatibility.
What happens when you try to send the receiver AC3 from the Xbox? Is there any sound at all? How is the Xbox set, and what kind of digital audio setting are you using on the receiver? Is the digital audio on the receiver mapped to a specific input? On mine, the orange coaxial and optical toslink are mapped to the Video 2 and DVD inputs.
Are you going direct from the Xbox to the receiver, or are you sending the audio via HDMI to your tv, and then using an optical cable out of the tv to your receiver?
Do you have a bluray player, cable box, or other source component you could try sending digital audio to the receiver, just to rule out the receiver as the problem?
What happens when you try to send the receiver AC3 from the Xbox? Is there any sound at all? How is the Xbox set, and what kind of digital audio setting are you using on the receiver? Is the digital audio on the receiver mapped to a specific input? On mine, the orange coaxial and optical toslink are mapped to the Video 2 and DVD inputs.
Are you going direct from the Xbox to the receiver, or are you sending the audio via HDMI to your tv, and then using an optical cable out of the tv to your receiver?
Do you have a bluray player, cable box, or other source component you could try sending digital audio to the receiver, just to rule out the receiver as the problem?