What are you watching?
When you select PCM the Xbox is decoding the audio, not the av receiver. Yes I realise that it’s “lossless” audio.Bitstream for gaming is limited to Dolby Digital or DTS on the Xbox. Not lossless. So when set to BITSREAM you are actually not getting full HD sound.
Compare with PCM (which is lossless HD audio) and see if you notice a difference.
According to this optical cable to the amp is the only option:
I guess you need a 2.1 HDMI amp.
Dolby and DTS are lossy audio codecs so information is lost. Logically, bitstream is always the preferred option, but with game consoles, bitstream actually downscales the audio codec quality. If it was just bitstream without having to opt for Dolby or DTS, that's the best option. Otherwise, PCM is the one to go for, which retains lossless HD audio.When you select PCM the Xbox is decoding the audio, not the av receiver. Yes I realise that it’s “lossless” audio.
However, When I select bitstream, and “let my receiver decode the audio”, then I get either Dolby Digital or DTS sound, depending on the game I’m playing, and this sounds better than PCM to me.
I guess the trickery in the amp is enough to improve the sound, I do have various other audio parameter options on the amp selected too that boost the audio.
Still no luck and it seems to be reverting to stereo in the audio settings although I do select DTS or PCM. Are you sure HDMI settings through the TV sound is right? I don’t know what’s going on.Should be in the output of the amp, then change your TV's settings for audio via HDMI.