What seems to be the case for me is that as long as the receiver CAN use a particular format that I have chosen in the input ocnfig menu, it will default to that. For example, my Xbox input, I have the default simply set to Dolby Digital. As long as theres a 5.1 DD signal present, this setting sticks. When the sound drops down to two chnanels, the receiver uses DD+DPL-2xC. When a DTS signal comes in, it switches to that.

Try turning auto-poll off, see if that helps.

"Try turning auto-poll off, see if that helps."

Auto poll is turned off. Should have mentioned that in the beginning, sorry.
I understand the mode switch behavior depending on the content of the data. What doesn't jive is with PCM 16bit/44.1kHz data, input is set to stereo and the 1070 switching to a surround mode, totally ignoring my setting the input for stereo.

Well Jim...
I've done it !!!
I've updated to (#10700605101231)
it was really easy(my computer and the 1070 are real close..but I did have to remove the screws for the rs-232 hook-up on the 1070...so I could accomodate my wire...( I'm just glad it worked)
And so far so good...
I can finally get stereo to stick to my cd input...
Hopefully it prevents those processor lock-up/no audio stuff as well

By the way Jim...
you might want to check your link for the firmware I had two...
this being the most recent..I think...
http://www.outlawaudio.com/support/prerelease.htmlone
Good luck...

Yes, the latest pre-release firmware was loaded.
I re-loaded it again last night but did not get to test out the CD input.

However, I do question the load instructions:
- doc says 10-15 minutes for the load process, mine took 2 minutes.
- doc says all settings will be lost, I lost no settings.
This was also my same experience the first time I loaded the firmware.

I agree...
load time was very quick...under 5min.
might be a pc perfomance thing...
I also didn't lose any presets or settings...
weird...but good....
and the stereo does stay...
oh JOY ! oh BLISS !

Just tested out the CD input after the firmware reload. The 1070 continues to totally ignore the STEREO input setting. Upon initial playback, the mode switches from STEREO to DOLBY PLIIx-C.

I can offer one thing to try, but it's sort of a guess. Try manually toggling to stereo using the "STEREO" surround mode button on the remote once you have a PCM source playing. Once you do that, see if it'll remember.

Let me clarify, for the CD input setting, the surround mode STEREO sticks - that doesn't change. The issue is, upon playback, the mode switches from STEREO to DOLBY PLIIx-C and I have to manually toggle back to STEREO. This is the behavior that's driving me up the wall. And, it only happens when the 1070 is first powered up along with the Squeezebox. Once playing, after having to switch from PLII back to STEREO, all subsequent tracks play back in STEREO. When powered back down, the scenario begins upon next power up.
Maybe it's something unique to the Squeezebox and should try the digital out of a CD player as a comparison.

BTW, a big thanks to everyone's input, help and suggestions so far. I do appreciate them!!!

Hi Jim,
maybe it is the squeezbox...
I just don't know
I did a few tests...
My DVD and CD player are a single unit posing as two...
DVD input with surround presets
CD input with stereo presets
And depending on the source...
it sticks...
I've noticed
if surround info is present on the CD input...the 1070 seems to follow suit...
and engages a surround modes
(seems like the last one selected)
if a stereo signal is detected...stereo stays put...


One last thought...
Does your squeezebox apply some kind of weird 3D surround, bass enhancement or something to the signal ?

I wish you the best...
Good luck...