Yes, the 990 does need to be on for the video switching to operate.

I'll stand by my normal advise for home theater setup: if you have a surround receiver or processor, plan to use it all the time (not just when watching a movie and looking for the full "theater" experience), because it will make using the system quite a bit easier to operate. It's very common for folks to set out to arrange things so you can just watch TV through the television's speakers (the long-standing and familiar method) even when setting up a surround system, but when you start to try to make it all work that way, it ends up being more complicated every time.