I forgot to mentioned the cable connection setup nightmare I had to go through.
I hooked up my dvd player and tv using component video cables to the receiver.
On my satellite box I used audio/video cables to the receiver. It only has audio/video or s-video connections.
The problem I had was dvd movies weren't being displayed. Finally I tried using s-video cables for all 3 devices. Then everything worked.
I guess all cables have to be the same meaning use either all component cables, etc. Do you know if this is the case that caused my initial picture problem?
Now switching to the topic on audio cables. I bought an optic cable for dvd player to the receiver.
The quality was great but the problem is where I'm suppose to connect the optic cable into the receiver?
Okay there are 4 digital input ports on my receiver.
Only a coaxial connection is supported in the DVD digital input port. I plugged it into the TV/Sat section instead. The result is on receiver's display window it reads "DVD" when I'm watching satellite tv and it reads "SAT" when I'm watching dvds.
Now the display on the receiver displays correctly when I'm watching movies it says "DVD". When watching tv it says "Satellite".
However on the receiver remote I have to hit the "TV/Sat" to get the receiver into dvd mode and hit "DVD/LD" button to get into tv/sat mode.
In the end I just transfered this "reverse" logic from the receiver display to the receiver's remote. I'm sure this sounds confusing but this is really frustrating and please bear with me.
I always suggest using whatever type connection the receivers default settings call for just to avoid what you have described. Your mistake was not buying a coax cable for your dvd player. I would suggest doing so and putting the inputs back into the default settings.