Actually John's not quite right on a few things:
See the wiki here:
http://wiki.jriver.com/index.php/Blu-ray- Yes, a tool like AnyDVD is needed to rip but even just to play an original commercial (so protected) Blu-ray Disc using MC.
- Once MC is able to read the disc
bitstreaming of all DVD and Bluray codecs works without need of the Arcsoft DTS decoder. (Even the wiki is a little unclear, possibly even wrong, on this point, I have just noticed!).
- TrueHD can be decoded using MC alone. You do not need the Arcsoft decoder for this. Unfortunately TrueHD is relatively rare.
- DTS-HD
decoding, not bitstreaming, needs the Arcsoft decoder John mentioned. The wiki tells you where to put it. Without it you will still get sound, but it will be lossy, traditional, DTS sound, not HD.
But the good news is if, as you suggest, you wish to send the HD codecs to your AV amp for decoding you do not need the Arcsoft decoder, but you will need AnyDVD or equivalent. The downside to bitstreaming is that MC is then unable to process the audio in any way. One thing a lot of users wish to do is use MC's "Videoclock" to adjust the speed of the movie to precisely match your GPU's refresh rate, so making video play smoother. You cannot do this if bitstreaming.
One other comment on your original post. You cannot pass HD codecs over USB or even over s/pdif. They have to go over HDMI along with the video.
Edit: oops, overlapped on a few things there, but together I think we have it covered