STR-DN1050 receiver: Dolby Digital works but NOT DTS?

Hey guys!
Sony has the WORST support in the world and their "tech support" people are a joke;  I've wasted 6 weeks time trying to get an answer and even Tech Support 2 can't figure it out!  I am HOPING you guys can give me an actual solution that works.

My setup:  
KDL-70W850B  TV
STR-DN1050  AVR

I have a Hi-speed HDMI cable connected to the ARC channel of both devices.

My issue:
I play MKV movies (with DTS, DTS HD, or Dolby Digital 5.1 audio streams) from a USB stick that is plugged into my TV.  When playing movies that have Dolby Digital 5.1, my TV says Dolby Digital, the Dolby Digital symbol lights up on the AVR display and I can tell it's playing true 5.1 surround sound. GOOD!

BUT, when playing movies with DTS or DTS HD, my TV says DTS Surround, my AVR's display says Linear PCM, then the Dolby PL symbol lights up, and it is NOT 5.1 surround sound.  BAD!

I want the DTS or DTS HD symbol to light up on my AVR display and to have it play properly with true 5.1 surround.  PLEASE HELP!


Here are the settings I've tried:
TV:  
Settings/Sound/Speakers --> Audio System
Settings/Sound/Headphone or Audio Out --> Audio Out

Settings/Sound/Sound Adjustments/Surround Effect --> (not sure about this setting, I think it is at +6)
Settings/Sound/Sound Adjustments/Sound Mode --> Cinema 
Settings/Sound/Sound Adjustments/Auto Surround --> On


AVR:
Settings/HDMI/Control for HDMI --> On
Settings/HDMI/Audio Out --> AMP

Settings/Audio Settings/Sound Field --> have tried both HD DCS as well as AFD Auto

Input = TV
Options/Input (Auto, Optical, ???) --> Auto