It can produce 7.1 from practically any format and any connection type. PLIIx can produce 7.1 from 2 channel analog (the RCA jacks), 2 channel digital formats like PCM or Dolby Digital 2.0, DD or DTS 5.1, etc.
When you say you've tried 'every setting', what kind of settings are you talking about? I'll have to get the manual to see if there is anything strange about that model receiver, but if it is a 7.1 receiver you should get 7.1 if everything is configured correctly.
Play a CD and press the listening mode button until the display says 'All Ch Stereo'. If that doesn't use all 7.1 speakers then something is configured incorrectly.