Okay, you bought them used, but did you HEAR them BEFORE you bought them or did you buy blind, so-to-speak?
Also, I know you have or had a stereo amp from info in one of your other thread... so have you USED that AMP with these speakers, and if so WHAT was the RESULT?
These are IMPORTANT questions that need to be ANSWERED otherwise we're all just peeing in the wind by taking second guesses.
As for your TV settings... PCM stereo is the equivalent of analogue stereo. The difference is the connector style.
Analogue commonly goes via stereo phono connections or SCART or 3.5mm jack. PCM is the digitised version of analogue stereo. It goes via optical or a digital coax. These two digital connection methods can also carry a Bitstream signal. This is a signal that can carry more than two channels of sound.
Bitstream is a single connection but with the up to 6 surround channels plus LFE encoded in a single stream of data bits; hence bitstream.
When you set the TV output to Bitstream you'll get discrete multichannel surround in Dolby Digital from the TV's Freeview tuner on channels that carry this format; that would the HD channels subject to the programme being encoded in discrete surround. You'll also get Dolby Digital and possibly DTS from the TV's built-in streaming apps so long as the programmes carry multichannel sound. Any channels or streaming content that isn't in DD5.1 will come through as PCM stereo.
What you probably won't get is proper DD5.1 from any source connected via HDMI. This appears to be covered by page 12 of your user manual.
The sound from the nVidia Shield reaches the TV via the HDMI connection. Through that connection and the HDCP handshake process the TV tells the Shield about its capabilities. This includes what the TV can accept as audio via HDMI. The TV and the Shield negotiate a set of compatible standards, and in all likelihood part of that negotiation sets the Shield's audio via HDMI as PCM Stereo. If you have the options in the Shield's set up menus for audio downmixing, then set the option to SURROUND. This will create a Dolby Surround version that the ARCAM can decode using Dolby ProLogic II Movie or DPL IIx if you're running a 5.1/7.1 speaker package.
To summarise then, set the TV OUTPUT to BITSTREAM. This will cover all bases.