On my Denon, IIRC, you would select from the menu the input for the BR player and from there change the input sources for this "input" as required. You can then select auto decode under the audio setting for this input, from this the Denon defaults to what ever signal the BR player is sending to the avr whether it be DTS-HD, DOLBY True HD, Multi channel in(PCM) or what ever it is receiving from the player.
The 5007 sounds similar, you select the input you are using then decide what the avr should do to decode the audio signal. You can also go in and change these settings manually from other areas in the GUI, it can take some time playing around and remembering what setting does what with these somewhat complex avr's.
So for music listening you would select the "Music" input from the menu and inside this section you should be able to select what the avr should do with the audio portion for the signal and then further refinements can be made under the "manual" settings(not under the MUSIC input but a separate section in the GUI) where you should be able make the Dolby PLIIX settings for 2 channel inputs etc.
It really is hard to guide you with all the intricacies of the settings, have you looked at the owners thread on AVS? There is usually some good info on those threads.
