It seems many of us are experiencing several problems with audio and AC3. Here is what I was able to find out after spending the entire day testing.
Media format: ISO, MKV
Media Type: DVD
Movie tested: 27 Dresses, Deceived, Father of the Bride, Jurassic Park, 6th Day, etc.
Backup software: MacTheRipper (ISO) and MakeMKV (MKV)
Media Player Version: 0.9.1
AppleTV2 version: 4.3
Jailbrake software: SeaSonPass
When AC3 setting is enabled no sound is produced on any AC3 or Stereo DVD materials.
When AC3 setting is disable sound is produced, but it is stereo mode ONLY. No Surround.
DTS setting (on or off) doesn’t make any difference, sound is always produced properly on DTS material.
When selecting different audio tracks form the movie menu and AC3 setting is enable it doesn’t make any effect and no sound is produced.
Movies with DTS and AC3 audio tracks. When playing movies with multiple audio tracks (Jurassic Park), sound is only played when DTS audio track is selected. Any other audio tracks (AC3, Stereo (English, Spanish, French, etc.)) won’t produce any sound. This was test was performed with AC3 setting enabled.
When AC3 option is enabled under the settings menu no sound is produced regardless of the audio track selected of audio formats (AC3, DTS, Stereo).
Sound is only produced when AC3 setting is disabled, BUT sound is produced on Stereo Mode no Sourround.
DTS option works properly under regular DVDs BUT with BLURAY Materials and DTS-HD audio track selected sends regular DTS 5.1 track and not DTS-HD audio. Basically, what I am saying is that DTS-HD is not working since it sends audio on DTS 5.1 format and not DTS-HD format as supposed to.
This issues are more are already documented formally under a support ticket.