So, look in your TV’s manual and find out what audio signals the TV can process, most likely PCM, AC3 and DTS. These I would forward as “audio passthrough”, then.
Also your speaker setting is 3.0 (would means channels left+right+center)?
I think it is worth a try to configure 2.0 which let you see an additional audio option where you can choose to transcode anything to AC3 which is not passthrough configured in your settings. Then it’s up to your TV to make the best out of the AC3 stream with your real speakers in/at the TV.
Wiki: Audio Setup and Information is a quite helpful article for this.