I have to agree with MrHaugen, maid... A better subject line would get better results. I didn't look at this for the longest time, probably because of the subject line.
Set this:
Options -> Video -> Audio for Video:
Playback device: Whatever your digital output is called. Select it directly, don't use Same as Audio.
Bitstreaming: SPDIF
Videoclock: unchecked
Normalize volume: I'd leave it checked, it is a nice system for AC3 audio. It is NOT dynamic range compression.
Then your Audio will NOT go through the DSP system in MC, because it will be bitstreamed out via the SPDIF. In other words, it will go out the "video path". That's what you want, probably, if your receiver/amp is only connected to the system via SPDIF. This will "pass through" the audio directly encoded in the video files, allowing your receiver to decode it.
If, instead of choosing your output device directly, you have Same as Audio selected as the Playback Device (I'm guessing this is what you have set), then MC must decode the audio itself, in order to send it through the DSP system (and WASAPI and the rest of the "audio path"). This can be useful if you want to use the room correction system and whatnot in the DSP, but is probably not the best choice if you are connected to your receiver/amplifier only via SPDIF.
Now... For your audio section:
In the Output Format DSP, under Channels, you probably have Output surround sound as Dolby Digital enabled.What this does is re-encodes all of the audio going through the "audio path" to Dolby Digital (AC3) on the way out. That's perfectly fine, if you want your stereo music expanded to 5.1 surround via JRSS, and you're connected via SPDIF only. Since SPDIF can only carry two uncompressed PCM channels, that's your only choice if you want to carry 5.1 surround via the SPDIF output. But that's probably why everything was coming through as Dolby Digital, because the audio was being decoded, sent through the "Audio Path" and the DSP, and then re-encoded to Dolby Digital (by this setting) before being sent down the SPDIF output, instead of going down the video path just directly out.
Hope this helps.
