Problem solved. It seems to be a transport issue. I tried another DVD player and the problems disappeared.

However, I do notice a distinct difference in sound quality between digital coax and TOSlink. TOSlink signals are quieter (I need to raise the volume 6-8db to get equivalent sound pressure). I also feel like the quality of the signal is better with coax rather than TOSlink (TOSlink signal seems quite "shrill" or "bright"). I'm using a custom coax cable (canare cable with canare connectors crimped on with Canare crimper). The TOSlink cable is from Outlaw.

Cheers,