PLIIx and DTS Neo:6 are known as 'matrix decoders'. They take 2 channel analog or digital signals and DD/DTS 5.1 and convert it to 6.1 or 7.1. They do it by using cues in the audio, such as out of phase sound, and steering it to the surrounds or rear surrounds in the case of 7.1.
Decoding doesn't change whether the original recording was compressed or not. Lossy compression like DD/DTS/MP3/WMA/etc throws away information that its model says you wouldn't hear anyway (eg. a soft sound immediately following a loud sound would be masked, hence no reason to save it). Matrix decoders create new channels where none existed before but do not compress or otherwise alter any of the channels that were originally present.