gonk,

The way that control works is that you tap "SURR MODE" and then use the up/down arrows to select the surround mode. This works fine as long as you're not in headphone mode. For whatever reason, once you've gone into headphone mode, it won't let you pick anything using this method.

There is a setup menu under "Surround Config" where you choose the headphone mode (one of three Dolby Headphone modes, or stereo).