Hook up Plasma TV to Audio system

You also have to consider what kind of audio you want to send out of the TV to your receiver/DAC. 5.1 surround coming over the air through a digital antenna is almost always piped out of the TV's optical input, but audio coming thru HDMI (high def or not) is almost *never* piped out of the TV's digital output. I don't know about audio signals coming from cable boxes or DVRs, I don't own any of these. It has to do with the internal boards inside the TV, this defines which audio input, and what kind of audio, gets output thru Toslink.

Eagleman6722, I intended to buy Panasonic Plasma and connect it to my DAC in 2 channel (PCM only) system but found out that it does not have DOLBY/PCM optical output format selection in the menu. It outputs automatically PCM with NTSC and DOLBY with ATSC.

Looking at the TAD 150 on line it appears to be two channel only. You can buy a Radio SHack DAC (1500093) for 39.95 and it will give you the option of Toslink or Coax to stereo RCA output. I use it for my wireless headphones in my office and it does just fine. It isn't "audiophile" quality but neither is a signal coming from a TV. If you don't like it you get 30 days to take it back.
It's too bad that the TV manufactures are finding ways to cut sales prices but eliminating input and output selections.

Are you using a cable box? Some have RCA outputs on the back.

The TV is connected to a DVR via HDMI cable...