I have found the source and solved my problem.
The PS3 default settings had the DD5.1 and DTS disabled in the audio output menu.
I enabled both and have success with the blu ray films and games!
After beating my head against the wall , I KNEW it had to be something within that PS3 console.
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Hitachi 51F510 1080i HD Monitor
Motorola DCH3416 HD DVR
Presidian PDR-0163R DVD Recorder
Sony HTDDW660 Home Theater
Comcast Digital w/HD
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