it kind of surprises me the # of posts that ask for help, but never mention their model #. Your loss, not mine.

Less $200 Onkyo 506 is being had for $199 as refurbed from shoponkyo.

That will get you DD 5.1.

OTOH, the HDMI is pass thru only, and you will never achieve lossless audio. In all honesty, just going by your stated budget, I assume you won't miss it anyways.

red/white out does only 2.0 for you. Unfortunately, the same can be said for optical out from TV. Cheapest way to get DD 5.1 discrete is optical (or dig coax) from player direct to receiver.