No Optical Sound Out

Hi, I purchased the feb 2011 13 inch MBP. I bought an optical wire, and a toshlink cable. I want sound out from the mbp, to my Onkyo TX-SR804 Amplifier which connects to my music system.

So I play a 5 channel sound out video (a DVD) from my mac, and then:

1. Connect the toslink - result: red light comes out of it

2. Connect the optical wire to toslink - result: red light comes out of the other end of the wire

3. Connect the optical wire to the Amp - result: No sound!

So either my amp doesnt work (unlikely) or some setting is wrong with the mac.

This is what appears on the mac:

1. Screenshot 1 looks at the audio options from preferences

2. Screenshot 2 looks at the audio midi options (and how it still appears as a 2 channel out)

3. Screenshot 3 looks at me clicking on the configure option

4. Screenshot 4 looks at me clicking on the stereo dropdown box from screenshot 3 and how everything is grey in there! WHY?

Please help. (Also tell me is it that I need to buy more things to get optical out from the mac? Or does it work for some people or something?)

Thanks for reading.