Video WDTV Help with DTS no audio

Guys I have bought WDTV connected to my Optoma HD66 via HDMI and Toslink to my AVR (VSX-817-K (Archived) - Pioneer Europe). I am getting no audio when I play MKV files with DTS. I am using standard firmware. My assumption was that WDTV can do DTS passthrough and if your decoder can decode DTS you should be good to go... :( Its not happening. Please advise..

A second not so important issue is that my video output keeps resetting to composite on reboot from HDMI. I have read the workaround on WDTV forum that you can learn the button sequence on remote to reset it back to HDMI without looking at the screen... Like (down+enter+down+enter+down+down+down+down+enter) to set it to 720p... yet to try out. Is there a cleaner alternative. It seems my Optoma and WDTV cant auto negotiate the resolution and therefore WDTV resets to composite.

As stated issue 1 is most important. I dont want to end up converting all my files to AC3.

The link for my WDTV: Amazon.com: Western Digital WDTV Full HD Media Player - Recertified: Electronics

P.S. If I dont want wifi do I really need to flash my firmware?
 
Its a first gen.. but why do I need to decode audio at WDTV...I just need DTS passthrough. The DTS would be decoded by the AVR. I have the audio out set to digital.
 
Several updates for the firmware seem to have come up. V1.30 is the latest. Did you try it yet?

WD TV Product Update

And keep tinkering around with some other files and the settings on your AVR as well. Apart from the DTS audio, is the AC3 audio being played through TOSLINK out?
 
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