yeah - I know...
I know - its optical running into a sony DA5000ES. I put a dvd in the mac - boom - DD 5.1 surround, I select surround in iTunes - silence. I've tried all the AMS permutations so that's not the issue it seems.
I've tried it with my PB (with a mini toslink) into the sony and with my G5 (standard toslink) into a Denon - same deal, DVDs yield surround, iTunes silence in anything other than stereo. VLC works fine - if I could watch iTunes protected content in VLC I'd be good to go.
I have perian installed as well, although I haven't actually done the ac3 passthrough hack with it yet - maybe that will fix it. ...surely apple doesn't intend on that being the solution though. Probably just a bug - maybe the next version of iTunes will fix it.
I appreciate the help, but I'm past the needing to have optical to a 5.1 system 🙂