I finally got in touch with Rotel support. The guy I spoke with was really nice and very helpful. After explaining the problem, the tech suspected that the problem was in the digital board, which processes the audio and video inputs before sending them to the video output(s) and the amplifiers.
Since I had already successfully bypassed the video by going through my scaler directly to the projector, he suggested that I bypass the digital board and use the receiver's multi-inputs for the sound from the L/R audio outputs from my STB. This will bypass any processing and the sound will go straight to the amplifiers.
This works and I am now just using the RSX-1067 to amplify the sound.
WRT repair, the board alone costs ~$500 and the tech estimated ~1.5hrs for the repair. When I factor in shipping costs, I'm between $700-$800 to repair a now outdated A/V receiver. It doesn't make sense to me to repair this unit.
Given this, I now have a Pioneer VSX-919AH-K receiver on the way. It's not top-of-the-line but it seems to be a decent receiver and has component video output so it's compatible with my projector. The receiver has HDMI output for when I eventually upgrade my output device.
Now what do I do with the RSX-1067? The sound quality has always been good so I wonder if I could use the unit to drive 2 zones; one zone with 2 locations using the mains and surrounds and the other zone using the back surrounds only. Input would come in via the multi-inputs and I would split the input connection for zone 1 to mains and surrounds. I just hate to have this unit go to waste.
Please let me know if you think this is a good idea. Thanks!