How to make ATI 785G (4200) pass DD and DTS through HDMI

I just replaced my WinXP-based HTPC with a new Windows 7 Premium system. The new PC has an ATI 785G motherboard with the 4200 IGP video card. I have the HDMI output connected to my Denon receiver and everything seemed to be working ok.

When I tried playing a movie in XBMC, however, all I could get was stereo. I went into the System > System > Audio settings and set Output=HDMI and enabled both 'Dolby Digital capable' and 'DTS capable'. But then the movie went silent and stuttered badly. I tried the same test with Media Player Classic - Homecinema and got the same result. What did I have to do to get surround-sound?!

After much research I finally determined the following:

1. The ATI 785G chipset supports DD and DTS passthrough on HDMI but not with the standard ATI drivers! (It does not ever, however, support HD audio-passthrough, e.g. from Bluray)
   
2. The standard ATI drivers create both an "ATI HDMI" audio device and a virtual Realtek SPDIF device. Deleting the latter doesn't help, nor is it recreated.
3. The audio chip on the motherboard is from Realtek and they provide their own alternate (better!) driver, www.realtek.com.tw/downloads
4. You can download the improved driver at their web-site under High Definition > ATI HDMI Audio Device

Once I installed this alternate driver I was able to go into the Control Panel > Hardware and Sound > Manage Audio Devices > Realtek HDMI > Properties. Under the 'Custom' tab there's a new option for "Allow AC3/DTS/WMA output (Reboot required)". Enabling this, then rebooting, finally fixed the problem!
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UPDATE 9/14/11 - I started having problems where the audio-link wouldn't sync-up (i.e., no sound) even though the Windows volume-control said it was working.  So I uninstalled the Realtek HDMI driver, then updated to the latest ATI Catalyst 11.08 driver.  Everything seems to be working now, and without the 'unofficial' fix!