Check to make sure that the option "Auto configure output on playback error" under Options->Audio->Advanced is set to no.
Check DSP studio to see if the output formatting is on (it should be off).
Make sure to choose a hardware device in Options-Audio. You should see something like hdmi:.......
If anyone else is interested these settings worked for some SACD ISOs
Audio Device
hdmi : CARD=PCH, DEV = 1 [ALSA]
Device Settings = Auto
Output Format
Output Encoding = None
Channels = Source Number of channels
Settings
Bitstreaming = Yes (HDMI)
Advanced
Auto configure output settings on playback error = No
Thanks to Bob for his help