Yep .. that was it. I changed Audio Output to WASAPI, set device to my AVR device which was in the list of audio devices, turned off all DSP output formats, Selected Red October HQ video, H/W acceleration enabled, bitstreaming to HDMI and I now get the Bluray DTS modes showing on the AVR input.
I will next try WASAPI event, which will probably work. I am assuming here that the 'sound card' device is the Intel HD 3000 graphics function on the Z68 chipset. The motherboard also includes an HD quality audio controller, which is also listed in the soundcard device list. But I think the Intel HDMI chipset shows the soundcard based on the device at the other end of the HDMI port.
Thanks all for helping .. the key was switching to WASAPI .. very much appreciated.