I read somewhere that the 990 does not have all of the newest codecs and I am having trouble finding a list of supported audio formats. When setting audio output settings on the ps3 it warns me that if my equipment is does not support a setting it may damage my speakers so here I am asking: what is and is not supported by the 990?
I believe the options on the ps3 include:

Dolby Digital 5.1 Ch.
DTS 5.1 Ch.
AAC
Linear PCM 2 Ch. 44.1 Khz
Linear PCM 2 Ch. 88.2 Khz
Linear PCM 2 Ch. 176.4 Khz
Linear PCM 2 Ch. 48 Khz

The Model 990 lacks an HDMI input, therefore it can't support digital input of multichannel PCM, Dolby Digital Plus, Dolby TrueHD, DTS-HD High Resolution, DTS-HD Master Audio, or DSD.

Since you are connecting the PS3 to the Model 990 with optical, the issue is basically moot: the 990 does support the normal output options offered by the PS3, with the possible exception of AAC. I would recommend choosing either Dolby Digital 5.1 or DTS 5.1 when setting up your PS3's optical output.