Yeah the settings in the sound menu have been changed to Dolby.
Not too sure if im honest, i have just got hold of this... http://www.eu.onkyo.com/products/HT-S3305.html set up and im still getting used to how it all works.
If the sound is coming out of all the speakers when it's showing PCM then yes it's upmixing it for you, and yes it will show dolby digital on your amp when it gets a DD signal from sky.
Yeah sound comes out of all the speakers when watching anything on the sky box. Not had the input change from PCM to the dolby sign yet. But again at the moment im not in a position to test it all properly.
Need to have a good look at the settings on the amp really, but it sounds good at the moment and dont want to alter anything lol.

not want to sound like I'm teaching you to suck eggs, but are you sure it's outputing over the optical Ie, is it set up in the amp as optical,( just to be sure remove the optilink cable to test.)
bullit
so just for the sky box i plug it direct into the hdmi on the tv and not the amp 
Just another thing if i do pull the optical out of the amp should i lose all sound?
Not sure but there is a light for that and its not lit so i presume not.do you have HDMI pass though turned on.?
bullit
Not got sky one hd, but i have foundE4 +1 Fantastic 4 with DD.Sky one HD, cold case is DD