What is almost certainly happening is an incorrect setting on the reciever.
To get the Dolby Digital Surround, you must come out of ProLogic mode, and go into DD mode.
On my Cambridge Audio amp, the options on both the remote & the amp are
"Surround Modes" - the amp's built in DSP
"ProLogic II" - ProLogic Mode
"DD-ES / DTS-EX" - The mode needed for Dolby Digital & DTS Discrete surround
"6.1 Direct" - the mode needed for DVD-A & SACD multichannel.
"Stereo" - forces stereo, no matter what.
What happens usually is this:
When you play DVD-A or SACD, the output from the player is analogue - always. To hear this, you need the analogue outputs from the player hooked up to the analogue inputs of the amp. There is no quality issue here, as the DAC used are industry standard 24/192 chips.
To get Dolby Digital in 5.1, you must enter the correct mode. You must also be connected using the digital output from the player to the digital input of the amp. CoAxial is the best option if you have both CoAx & SP-DIF. I do not know this Kenwood amp at all, and will look it up online. I also suggest a call to kenwood, or a visit to their site for a copy of the manual. These beasts are complex, and not always obvious in connection & usage.
When in ProLogic mode, everything you play will go through the internal ProLogic decoder, and this is usually the default setting. Again, the manual will tell you how to change the default setting so you can set things up the way you want to.
If you are still having trouble, please feel free to mail me & I will help.
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