OK, I figured we would play with it and see what he liked best. The Room is about 16' x 13' I think with 9' ceiling that is vaulted some. It is open to the kitchen in the rear as well. What I think is the worst (for audio) is the L shaped couch and its close proximity to the front left speaker. Like any other multipurpose room, it is not anywhere close to perfect for HT. The issues don't seem all that bad though, and I think once we are done it will be nicer than a LOT of other set ups.
You are right on for what I was looking for. I can never remember the difference between bitstream, PCM, and so on. I know there is always 5 or 6 options, and some are better than others. I will probably update this once I am there and I can see what the options are if I am still not sure.
Thanks,
Sean