Hi Gonk - Grabbed an older TV with an S-Video input and got my speakers setup. Auto setup didn't work - claimed it couldn't find the speakers - but all of the audio signals were firing - maybe a bad mic?
Do the internal test tones work? If they do and you are getting auto calibration errors, I would suggest lowering the crossover points to 40Hz or 60Hz and trying to adjust the height of the calibration mic so it isn't too obstructed by furniture. Also make sure the mic is securely connected to the front panel jack.
Is there no way to do the setup with an external display?
You must have a monitor connected to do the setup. The automatic setup is not required - you can do it manually with an SPL meter (either a Radio Shack meter or a meter app on an iPhone or Android phone) and the 990's internal test tones. The manual describes the process pretty nicely.
Got the 990 to detect he audio source on my BlueRay (LG) and my DirecTV DVR and DirecTV HD receiver by resetting them while it was on. I figured it wasn't detecting the sources - so I connected my iPod to the CD input and it found it quick - so I reset all of my other sources and it worked.
Have you gone through the input setup menus? You'll probably want to edit input names and possibly even change which source's digital connections are assigned to which inputs so it is more logical when selecting inputs.
7.1 direct from BlueRay - better than the optical?
Blu-ray offers several audio options that cannot be output via optical or coaxial. These include multichannel PCM (uncompressed audio), Dolby TrueHD (lossless compression), and DTS-HD Master Audio (also lossless compression). When playing multichannel PCM tracks, the player's optical and coaxial outputs will either output downmixed stereo PCM or a player-generated lossy Dolby Digital or DTS signal. The multichannel analog output gives you those lossless audio sources directly. As a result, multichannel analog output is typically preferred over optical or coaxial with Blu-rays. The only caveat is that the player's DAC's are now going to contribute to the overall sound - plus you have to have a player with multichannel analog outputs, which not all LG players offer.
You may still want to use your optical connection for DVD's and CD's, as even if your LG has a multichannel analog output it is doubtful that the player's DAC's are as good as the 990's. Since the optical output works fine for DVD and CD playback, you will get better overall sound quality from a digital connection to the 990.