It is my understanding that using HDMI for audio you setup the player for bitstream. Would I set the player to PCM when I hook it up to my 990 using the analog inputs?
Because you aren't using the HDMI output for audio, the digital audio output settings aren't really going to affect you. The multichannel analog output only works because the player is decoding internally, and since the BD50 supports decoding for all of the possible formats it should be always doing that decoding to make the multichannel analog output active.
If you were using the BD50's HDMI output for audio, you would need to choose between "bitstream" (leave the new formats undecoded) and "PCM" (decode them internally and output multichannel PCM).
I just downloaded an owner's manual for the BD50 and it looks like the analog outputs are only for 5.1. Not sure what to do now.
There are a few options.
One is to get the BD50 and connect it's 5.1 output to the 5.1 portion of the 990's 7.1 input. This will mean that the (small number of) 7.1 titles will be downmixed to 5.1 and that the 5.1 titles (the majority) will be played back with no opportunity to expand to 7.1.
Another is to get the BD50 and use splitters to connect the left and right surround outputs to the left side/back and right side/back surround inputs of the 990's 7.1 analog input. The 7.1 titles will still get downmixed, but now all titles will be played back in a sort of 7.1 (duplicating the side surround signals in the back surrounds).
A third is to wait for someone to start selling a player with the BD50's decoding capabilities and a 7.1 analog output. That could put you into 2009, though.