I experienced the same thing very early on after I bought my unit. I called the Outlaws and was also told to try a different optical cable or try the coax input. That fixed the problem, (the coax input) so that's what I use.
This was prior to the flag issue that is fixable by turning on your center surround. After this was discussed again a while back, I decided to try the optical input again. It still has the same problem. (Not that I thought it would magically fix itself.) It doesn't happen on every DVD either. Just a few of them.
My opt2 input seems to work fine. That's what I have my Dishnetwork hooked up too. No dropouts even on HBO's DD broadcasts.
So apparently, there are a few of us out there that are experiencing the same thing.