Aye, on some sets its just for the tuner/s.
That doesn't necessarily mean that HDMI will pass through 5.1 out of the optical.
My Panasonic plasma TV has optical out, but only outputs stereo through the optical when playing my Xbox and PS3 through HDMI. I have to manually use optical out from both my PS3 and Xbox straight to my amplifier to get 5.1 sound.
Is it a 360 Slim? Or is it an older style one? If it's older, you can get the optical output adapter for it if your TV doesn't output 5.1 DD properly.
Dave
Older fat model, I just didn't want to have to pay for the silly extra dongle.
I guess I will just try it when I get it and cross that bridge if I come to it.
I need to check this as well, as I currently have XBOX -> TV by HDMI and then TV -> Turtle Beach headphone amp by optical.
EDIT: Damnit, looks like my TV (Samsung LE32B550U) doesn't do this. Time to buy the HDMI and optical cable thingy.
Did you actually try it?
If you did try unticking display discovery on the Xbox and you might find it works.