The Blu-ray player never had an issue until routed through the receiver, so I know for a fact that the receiver is the issue. I just don't understand how. I don't see how it could be an HDCP issue either since I'm streaming netflix.
The 360 only has three settings. Stereo, Dolby 5.1, and Dolby 5.1 w/ WMPro. As far as I know, it doesn't do any audio decoding itself like a Blu-ray, DVD, or PS3 will do.