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Thanks to everyone that responded. As it turns out, those that were familiar with Denon were correct, it does default to Prologic II until the audio stream begins. I didn't see the behavior originally because I was testing with an old DVD that only had a streo track. Thanks again.

Please forgive a newbie question. My old second hand receiver died last week (A Yamaha Pro Logic), and I replaced it with a Denon 1403. I connected my DVD player via a digital coax cable to the receiver and sure enough, the digital indicator on the receiver lights up. So, here is my...