ah, thats likely to be the problem imo, the higher bitrate sound that you get from blu-rays is meant to be transported via either hdmi or analogue, i think thats why your getting stuttering, distorted sound from blu-rays but not from dvd's..
you may need a newer av receiver that is hdmi enabled, disconnect the coaxial and use a hdmi lead from the s370 to the receiver..
or, a blu-ray player like the sony bdp-s760 that has multi channel analogue outs which you can connect to the harmon cardon using audio analogue interconnects..
you may be able to overcome this with your current set-up if you enable the sony to output dolby didital via coaxial? im not sure about this though..
i think perhaps the sony is decoding true hd and dts, but then i wonder if you would get any audio
, if it was set to bitstream pcm instead then maybe blu-ray audio would work ok, this is a tricky one..