Well guys I have connected my newly purchased AVR (Onkyo 807) to my PC using its sound card's optical out (x-fi xtreme gamer) but I could get only two channel sound (stereo sound) using that I Google about that and found this card is restricted up to stereo sound at max in optical out option.
So how can I get proper unprocessed 5.1 channel audio stream of my MKV files from my PC to AVR to do all the audio processing.
use HDMI, from your GFX card, or a soudncard with HDMI ouput (not many out there, and damn expensive) or you can connect it to your receiver using analog interconnects, only do this if your receiver has an analog bypass feature.
the only way to get 5.1 through digital cable, is through compression. usually with Dolby Digital or DTS.
if you want your receiver to do the audio processing (usually better) HDMI is the only choice really.