how should i move forward...blu-ray etc...?

if you go to theta's site and library, product manuals, casanova, owners manual pdf page 16 shows the exact rear panel layout i have.

02-09-09: Chadnliz
Why cant it pass the signal from an internal Blu Ray decoder?

Because it doesn't have an analog 5.1 or 7.1 channel input. You can only connect a coax or Toslink digital link, or an analog stereo pair from a new Blu-ray player with internal decoding to the Theta Casablanca.

02-09-09: Richard_stacy
if you go to theta's site and library, product manuals, casanova, owners manual pdf page 16 shows the exact rear panel layout i have.

I did that, though I found the back panel diagram on page 7. At any rate, there is no multi-channel analog input and no HDMI input, so there's no way to get a lossless surround signal from a Blu-ray player into your Casablanca.

To illustrate what I'm talking about, look at the back panel of an Outlaw 990 AV Pre/pro here. Just to the right of the eight XLR inputs are two sets of color-coded RCA jacks, delineated by two white rectangles. The upper rectangle has 9 RCAs and is labeled "PREAmp Out," Your Casanova has an equivalent 5.1 channel output that's sent on to your amplifier(s).

The lower rectangle has 8 RCAs and is labeled at the bottom, "7.1 AUDIO IN." The 8 jacks are L, C, R, LS, RS, LRS, RRS, and Subwoofer. This 7.1 "Audio In" grouping (or at least a 5.1 Audio In grouping as many pre/pros and AV receivers have) is what you need at a bare minimum to get the lossless surround signals off an appropriately equipped Blu-ray player.

I have a Boston Acoustics AVP7, which is based on the same pre/pro as this Outlaw, and I use its 7.1 analog inputs this way to extract an uncompressed 5.1 surround signal from my SACD/DVD-A player with internal decoding. When used this way, the pre/pro simply functions as an 8-channel line stage.

johnnyb thanks, what i was afraid of. i'm pretty sure that is correct. was not sure if the digital input formats would work but i guess not. oh well!
it really is hard for me to imagine things sounding that much better anyway. i have yet to hear movies sound better than they do in my home with the exception of a demo theater room the old store i used to haunt had with all the best gear they had and it was just dolby digital/dts 5.1.
i cannot believe some of the setups guys on here have!! but most of them are still the same old formats too, just monster gear to play through. fortunately, i don't know any of them so i do not have to hear them and come home thinking mine sounds bad.
it is just that damn bug inside that tells me i can get better. then sometimes i wonder if i should just get a damn current receiver, 5 or 7 $1000 speakers, a nice little sub and sell all my gear...AAAAHHHHHHHHHH!!!!

02-09-09: John_z
...Unless I read their website incorrectly, it looked to me like the Casanova has analog ins, "two pair analog L/R, plus one pair rear L/R, a center and sub..." Of course this may have been an optional card which your particular unit lacks.

Where on the Casanova product page does it say that?

Oh I thought he had multi channel inputs I guess I read wrong so sorry if I steared you in wrong direction.