It looks like the unit has 2 zones. Home Distribution 1 + 2.
For the upstairs system use home distribution zone 1 connections.
Connect S-video to receiver.
Connect Digital Audio out to receiver.
Connect a video output from receiver to TV. Depending on receiver this could be composite, s-video or component.
For the downstairs system use home distribution zone 2 connections.
Run composite video and L/R audio signals to receiver. Connect a video output from receiver to TV. Depending on receiver this could be composite, s-video or component.
With this configuration, the upstairs will have better video and sound quality. If you prefer that for the basement then switch above suggestions.
coax (worst) < composite < s-video < component (best)