I have it somewhat working tonight... I decided to use an older Technics Digital Surround Processor SH-AC5000 as an input from the ATV3 optical output. I then connect the 5.1 channels to my NAD T753. I now do get sound, however, the levels are off and I can barely hear peoples voices in movies. Tried my Bluray and same problem. While trying to debug, I have had my NAD receiver shutdown on me and switch the power off. I think I need to let the system cool and try tomorrow.
My conclusion after trying these different options are the following:
- ATV3 optical power output is less than ATV2 as my ATV2 works with exactly the same setup.
- my optical cable is about 35 feet as my system is in the back of the room while my ATV3 is in front under the TV.
- NAD T753 supports Dolby Digital, but for some reason, downmixes the ATV2 signal to stereo or 2.1.
-I do not have any settings to change this in my menus
- The Techics SH-AC5000 can decode this DD audio signal, but my more recent NAD T753 cannot.
I already have the following settings on both my ATV2 and ATV3:
settings > audio + video > dolby digital = ON
settings > audio + video > audio output = AUTO