Yeah, I have had the same issue, even with the old firmware. Two things were involved in my situation.

1. My DVR box had hand-shake issues with the 990. For some reason, it just wouldn't always lock the Dolby Digital signal, even when truly a Dolby Digital signal was being sent. I would then subsequently select "Dolby Modes" and the 990 would then allow me to choose "Dolby Digital". Due to other reasons, the cable company switched out my DVR box to a completely different model and the 990 no longer exhibits this behavior.

2. On page 25 of the 990's manual, there is the following listed...
NOTE: The Model 990 defaults to Dolby Pro Logic II(x) Movie mode with any source device supplying Dolby Digital 2.0 or PCM sources
This is an annoyance to me because no matter what setting I have selected for a program (like Dolby VS 5-SP WIDE), if the program that I am watching goes to commercial which is Dolby Digital 2.0, it switches to Prolic II Movie. Then when the show returns to what I was watching, I have to flip it back to "Dolby VS 5-SP WIDE" manually. That gets annoying every commercial.

My issues may be similar to yours, or might not be related at all. I just thought I'd mention them.

I guess I have learned to deal with it.

jrlouie, You have described my situation exactly!

In my case, the "commercial" is the Comcast on-demand menus when one music video ends, and I go to select the next.

I get bounced out of Dolby Digital to Pro Logic II Movie and have to switch back manually.

It is indeed quite annoying.

Thinking about this some more, I wonder if all AV processors have to pick some arbitrary mode when dropping into Dolby 2.0?

I can see how others would prefer a different default if using the 990 mostly for movies.

If that is the case, then the feature we'd be looking for is the ability to choose the default mode for Dolby 2.0 input from the configuration menus.

What would be the appropriate settings for the 990 when listening to Satellite(Directv) music channels vice watching movies from the same source. I currently have it set to PLll movie for both but I think PL ii music sounds better with music.

For DVDs, does the DVD player or the 990 "sense" what the encoding is or do I set it manually based on the box it came in?

Xenon, I can tell you that on movies that give you audio setup choices between Dolby vs DTS, the 990 selects matching modes depending on which setup you've picked on the DVD. I've tried it.

I agree that PL ii music sounds better with music. I like Dolby Digital VS - Wide even better. I just wish I could make the 990 remember and stay with my last setting when Dolby Digital 2.0 content intervenes.

In the end, I think what matters most is what sounds best to you with your equipment in your room.