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MP4 AAC Mediocre Sound

Sharp LCD Tv with 2 HDMI Inputs, 1 optical out
HP Laptop Pavilion with HDMI output + NVIDIA CARD, Windows 7, Windows Media Player, VLC media player , Media player Codec Pack (downloaded from CNET)
Bose 5.1 speaker system
Denon AV Receiver 2801 with Dolby & DTS,does not have HDMI support.

Connections: laptop to TV with HDMI and TV to AVR with optical cable.

Settings on AVR are on digital input with output selection for automatic Dolby Digital/DTS/Dolby prologic.

Watching MP4 files with AAC 5.1 downloaded from from various torrent sites from reputed publishers like SecretMyth etc.

Problem is when watching these movies the AVR display panel shows the sound as in Pro logic mode and the sound quality is not as good as in DD or DTS.
Whereas whie watching some other movies, torrents(seldom available) having info saying that audio is in Dolby Digital, The AVR panel this time shows DD and the sound quality is perfect.

Question is how to watch these AAC 5.1 movies with similar quality of sound as in Dolby Digital/DTS?

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Your receiver doesn't support AAC 5.1
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There has to be a way

Is there a way I can convert my downloaded MP4 movies to same the quality video and AC3 audio files and watch them with my existing equipment? Thanks

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Conversion solution-Google is your friend

There are probably several decent ways to convert your AAC 5.1 MP4s to AC3. It looks like google throws back quite a few options-

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