On the sound, it might make a difference if you connect the Blu-Ray player directly to the Hi-Fi through its own RCA phono outs. If you do this, you'd need to change the Audio Output Priority under Audio Settings to Stereo Analogue. If you need it actually coming out of the TV speakers, you could also look at the Audio (HDMI) setting and try 2ch PCM on this setting. There's also a mode called Audio DRC which has a TV Mode which apparently makes low sounds easier to hear. Sorry, I can't try any of these as mine is hooked up to an amp and hooking it to the TV to test would require a lot of shifting around!
For the picture, I have the following set under Video Settings, I have Screen Format set to Original, DVD Aspect Ratio set to Letter Box, Output Video Format set to HDMI and 1080p and everything else set to Auto. Whilst playing a disc, it's probably worth pressing Options, going into the A/V Settings, then Video Settings and checking out the options there e.g. turning on and off the NR.