it seems to work set on Stereo, I think that it may have been my fault as I set it on source thinking that meant how many speakers we have.
MC has become a little difficult for the average joe blow too many settings for audio and video.
No, the only way it's working (if by working you mean all speakers are active) is if your receiver is upmixing the sound for you, using some variant of Dolby Pro Logic for example. If you want consistent results, you really should set JRSS to output to 5.1.
The setting you're adjusting is most simply (and simplistically) described as "How many speakers do you want the sound to come out of?". This assumes your receiver will not mess with the audio and upmix to more speakers.
1) By selecting stereo, that means two.
2) By selecting "source" that means however many channels the original audio file had, which in most cases is also two (stereo).
3) By selecting 5.1 you ensure that all audio goes to your AVR as 5.1 at all times.
Scenarios 1 and 2 may be overridden by the settings of your receiver (AVR) as mentioned in my first sentence. Your ideal solutions are:
Either-
(2) but with a Dolby ProLogic II, DTS-NEO, or other upmixing mode activated in your AVR.
OR-
(3)
Choosing option (1) might cause all kinds of trouble in the future, especially if you don't bitstream movie audio, but rather decode in MC.