If you are talking about dvd's, as long as you are using the digital output from the dvd player to the receiver, i.e. digitial optical or digital coax connection, then the signal is passed from the dvd player to the receiver where the receiver decodes it and sends the signal where it needs to go.
The only exception to this is if your player is capable of playing dvd-a or sacd discs in which case you will need 8 separate rca cables running from the multi channel outputs on the dvd player to the multi channel inputs on the receiver in order to hear them in surround sound as they dvd-a and sacd will not pass surround sound over a digital connector.
As to the dvd players you have seen that specify 7.1 surround sound output, these may have be referring to the 8 multi channel outputs. See if you can see the rear panel of one of these units. I'm thinking you should see 8 individual rca connectors corresponding to the Left/Center/Right/Left surround/Right surround/Surround Back left/Surround Back right channels. Some do not include the connectors for the 2 surround back channels and are thus limited to 5.1 with the analog connectors, but using digital optical or coax, are still capable of 7.1.
