Yes, the 990 does transcode between s-video and composite. I double-checked the manual, since I haven't actually attempted this with my unit, and the manual has this to say: "Any signal that appears at the S-Video input jacks (DVD, Video1-5 In) is automatically sent to the composite and S-Video VIDEO MONITOR OUT and VIDEO 1 REC OUT jacks, and to the component MONITOR OUT jacks." I think the second zone actually uses just straight video switching (composite inputs only sent to the composite zone output and s-video inputs only sent to the s-video zone output).