Betcha you're trying to use zone 2 for this.
For zone 2, all roads lead to analog.
This receiver, like most, won't feed a digital signal to Zone 2. Once you accept this fact, the skies will clear, the sun will come out, a rainbow will appear, and peace and happiness will rule.
The cheapest work-around to this is to use the stone age method of taking the output via the headphone jack to a spare high-level (aux) input.
Either that, or get some sort of external device that will convert the Ipod's digital output to analog, to feed that aforementioned aux port.
Or, simply use the "B" speaker outputs.