Optical Output Not Working

I have had my AppleTV since Feb 2007 and been working well for me. I have been running into a problem lately where I cannot get the ATV to send audio thru the optical port. I have tried every combination of connecting it to my Onkyo receiver to test with no luck.

*Here's what works:* Audio from cable box w/ same optical cable and same port on receiver. HDMI audio on TV (my receiver does audio/video passthru but doesn't do HDMI audio, hence me using optical cable for this application). I also do have a visual that the light is coming thru the cable from ATV.

*Here's what doesn't work:* Optical audio on any input on my receiver from ATV.

I didn't really realize this as I also have been using analog 2 channel cables to my receiver as my receiver requires this if I want to use 2 sets of speakers at the same time (ie indoor and outdoor). When I did start noticing some problem, but didn't really think to much of it at the time, my receiver would try switching to digital audio but would revert back to analog audio in a matter of a second or two.

I have factory restored my ATV to its original Version 1.x and updated to Version 2.3 with no success either way.

I also live over an hour away from the nearest Apple Store and want to make that my last resort for warranty replacement as I do spend the extra $ on Apple Care. I really wish Apple could do like most other hardware manufactures and do a pre-replacement, but it appears that I'm out of luck on that.

Any ideas?