Similar problem here.
Optical makes occasional clicky digital noise sounds. Coax soundtrack is barely recognisable and music and speech are very distorted and glitchy. It all works fine via HDMI through my TV, but the sound is a bit rubbish, obviously. It seems to me that there's a bandwidth problem when using coax and/or optical. But I can't believe the player is trying to send HD audio down a coax or optical cable..... PCM downmixing is just as bad if not worse, so I'm almost certain it's not a conversion issue.
I've been advised by Sony support that my BDP settings are all fine and that the player should transmit DD and DTS via optical or coax without trouble, and therefore the player must be faulty if that is not working. But he was just reading the user manual so I don't think he was any kind of expert. I've tried it with BBC iPlayer and a standard DVD - I haven't tried a BD yet as I don't own one. I'm returning the unit to Play as a faulty item for exchange, and will advise what happens either way in due course!
Receiver is Cambridge Audio Azur 540R v2. No HDMI, but does have 6.1 inputs, and handles DTS-ES 6.1, but I'm using a 4.1 speaker setup, so this is simply a compatibility issue for me. I can't buy a DTSHD/DDHD amp as they are all too tall to fit in my TV unit. I just want it to sound better than it does through the TV speakers....
I am starting to think that I should have just bought a player with 6.1 or 7.1 analogue outputs..... if I can't get the S370 working I will probably end up replacing it with a more expensive player that has just that.
