My old receiver died on me, so I got a new one, a Sony STR-DH520. All I could afford at the moment. It is my first HDMI-capable receiver, and I was eager to test DTS-HD and DD TrueHD on my surround speakers. After a bit of digging I found that the PS3 doesn't support sending uncoded HD audio through the receiver, but instead decodes on its own and sends the audio as Linear PCM. This means that the receiver won't auto-detect the sound source, and won't show what sort of audio signal it's processing on its display. My old receiver, that got the non-HD sound from my PS3 through an optical cable, would auto-detect the sound source and show either "DD" or "DTS" in its display. What I've gathered so far is that as long as my new receiver indicates it is receiving HDMI audio, and displays "LPCM", it is playing the HD sound just fine, only it's already been decoded in the PS3. Am I correct so far?

Now, the strange thing is, I tried playing a regular DVD with straight DTS sound, and I thought the receiver would then read "DTS" in its display, but it still showed "HDMI" and "LPCM". Pressing the Select button on my PS3 showed the audio was playing back in DTS, but I thought the receiver would auto-detect regular non-HD DTS? The manual is very vague on the point of HD sound decoding and playback..

Actually if you want the ps3 to not decode it all you have to do is manual adjust the audio settings. You have to uncheck all PCM audio check boxs. Then your reciever will decode it. It wont say PCM anymore. From what I gather you are letting the PS3 auto select which will in turn always choose PCM.