Bryan, use setting 1, regardless of what the manual says(which is in there primarily for legal liability and Underwriters Laboratory concerns). Setting 2 reduces the maximum voltage and therefore the maximum current and power available and should only be used as a last resort if the receiver kept shutting down at the 8 ohm setting(which obviously didn't happen in your case). So, to have full power available, although you might not actually need it, go back to the original setting.

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Enjoy the music, not the equipment.