Setting up my new Oppo BDP-83 (hooray!) and was curious about which way to go with my audio out source. My receiver has HDMI 1.1 plus the analog 5.1 inputs for SACD. Which way will give me better sound? Also is PCM or DSD a better way to go?

Unless your receiver has very bad bass management, go PCM/HDMI for SACDs. The receiver is more likely more flexible with speaker settings to match your room.
DSD over HDMI requires HDMI 1.2.
Enjoy!

My HK has good base management so that is not a problem. Thanks.

You will get great sound from either using HDMI or the analog outs. However when using HDMI you are using the receivers bass management while with the analog outs you will be using the OPPO bass management.

The OPPO also has a fixed crossover of 80 while your HK will have a flexible crossover setting. Setting up the system using the analog outs is a bit more difficult and takes more time. The analog section is great for people that do not have an HDMI receiver but if you can pass HDMI it is preferred.