I'd personally not enable the 1080p option. No TV broadcaster provides anything with 1080p to Virgin Media and all the HD content will be 1080l in nature. I'd suggest you select the following options for the V6 box's video output:
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As well as the 576i option that relates to SD channels:
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The above options will result in the V6 outputting whatever you are watching at its native resolution without the box applying any additional processing or upscaling to the video.
When you had just the topmost 1060p opyion selected, the bix was scalling everything to that regardless of the natives resolution of the content you were accessing via the box.
As to Netflix via your TV and you not getting the AV receiver's onscreen graphics while using ARC. This is normal and ARC is an audio only connection from the TV to the AV receiver. You can simply look at the AV receiver's own front panel display to ascertain what audio you are getting or what audio processing you are applying.
The Netflix issue associated with the V6 will simply be a delay before the devices in the HDMI chain all synce with pne another again.