Need help digitally connecting PS3, Xbox360, Samsung LN40b650 to Sony STR-DG520 (1 Viewer)

Hello.
i have my cable box, ps3, xbox360, connected to my tv via 3 hdmi cables.

from my tv i have a toslink cable going to my receiver

i cant seem to get my receiver to broadcast in digital.
i also noticed that when i use the toslink i get a terrible popping or cracking sound when changing channels or navigating the 360 and ps3 menus.
fyi 5.0 speaker set up ( no sub)
i also dont know what settings to use on my ps3.


and my receiver has a whole slew of setting that i do not under stand like
AFD auto?
DEC PRI
DEC AUTO
DEC PCM
DUAL MS, M, S, & M+S
CRS FREQ
and every so often the display flashed PCM 48 kHz
please if you can help

frustrated gamer
agingepic340

You need to change the audio connections for your devices. The TV's optical out will only send a digital signal from stations picked up via its internal tuner, which you aren't using. The external sources are downmixed to stereo before being output.

Your receiver has three digital inputs - two optical and one coaxial. Connect the audio from each of your sources to one of these inputs and you should be good to go.

You'll need to change inputs on the receiver as well as the TV when switching sources.