Your BDP has to be set to output LPCM if the nanoAVR is in stream. LPCM is essentially a raw format output from the BDP that your nanoAVR adjusts to give you control of the output to the 975. What comes out of the NanoAVR is the adjusted LPCM signal and the 975 may not be happy with it or maybe the NanoAVR is having issues(doubtful since two systems are having the same issue). A bitstream signal is something that has already been encoded with the DTS or Dolby codecs and does not need to be tweaked by the 975. Since you are using the NanoAVR the 975 has to take that input and interpret it as dolby or DTS to make the output.