1. Messed up picture
My PS3 is hooked up through HDMI to my LCD, which is hooked up to my receiver through Digital optical. My DVD player and 360 show (on my receiver) that they are running in Dolby Digital. My PS3? In stereo (or "Pro-Logic 2").
On a side note, I found the solution to the Audio problem. You were right with the PCM/Bitstream stuff. Also, some blu-rays, like Dark City, ONLY have a dolby digital 7.1 option. My receiver can't handle anything over 5.1, and it also can't handle the "Tru-HD sound" option either