Question A little help needed with inputs and my soundbar

I was wondering if someone can help as I'm abit thick when it comes to audio. I have the C9 for ages and a C7 before but never really felt the need to get a soundbar etc however I managed to pick up an LG SL8YG for 199.99 so I thought why not.
I have the sky Q box directly to the soundbar as not to get the audio lag when using Dolby Atmos then the soundbar direct to my arc port and my Xbox one X to HDMI 1 on the TV with it set like this I know I can't get Atmos on the Xbox without audio lag so what is the best audio setting would it be PCM stereo, 5.1 or 7.1 or would bitstream DTS or Dolby Digital be best I assumed it would be one of the bitstream options however dialogue is noticibly quieter than when using PCM stereo especially in the new Avengers Game. Also is there a HDMI switch I could buy which would I could then connect both Xbox and sky box directly to the soundbar for lag free audio in Dolby Atmos which could also pass through DV, Atmos etc although I assume if I was to do this I would lose VRR capabilities am I right?

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