Thanks for all the suggestions. I feel that i have by-hearted page 36 - 39 of Denon owner's manual. So quick update on where I'm.
I called up Dish Network tech support and they passed on the buck to say its AMP problem because the audio plays for both HD and non-HD if the HDMI cable is routed from settop box to TV directly.
Now its turn to talk to Denon, so denon cust.service passed it on to settop box to be at fault and did go into some nitty gritty such as HDCP handshake seems to be failing etc. and to call back Dish N/W.
Called Dish N/W, tried all sorts of trouble shooting and the tech guys gave up and are sending a new reciever. There will be a technician as well, so hoping this thing will get sorted in person then.
I have checked every possible concievable thing but no luck. Will update again once have something relevant. Thanks again.