You are doing everything right on the Mac end of the connection. The message that "The selected device has no output controls" is to be expected, because when digital audio output is selected, the computer does not control volume, balance, tone, etc. — the device that receives the signal (in this case, your TV) controls them.
On the TV end of the connection, you probably need to make some changes. First, check your TV's instruction manual to make sure you are using the right HDMI input port on the TV. If it has more than one HDMI port, there is probably a specific port you must use for video input if you are sending audio separately to the TV. Then you will also need to select your audio input port (the TOSlink port) somewhere in the TV's menu system — again, see its manual for guidance. Post back if you continue to have trouble or if these suggestions don't make sense in light of whatever the TV's manual tells you.