The options set sound about right. Given that you're getting 2-channel sound it would seem that perhaps the options on the AV9 aren't set correctly.
What happens when you cycle through the Mode options on the AV9 whilst playing a DVD on the Sony? Can you select DD5.1? If not, then your AV9 might not be set-up correctly.
If the AV9 seems OK, what happens if you use a dedicated DVD player using the same interconnect and input on the AV9?
On my AV9, only the DVD input behaves as expected, in that it automatically selects the correct audio mode. On the inputs fed by my Sony HDD, the AV9 sees the source as 'Digital Stereo' until I start playback from the HDD, then it will 'remember' the last setting that I used - DD2.0, DDPLIIx, etc.
To be honest, I'm not sure if I need to tweak the input parameters on the inputs on the AV9 that I use for my Sony HDD, but as I mainly use the HDD I find that I need to select the decoding type manually. For example, NYPD Blue recorded from More4 is originally recorded in Dolby Surround. I have to manually select Dolbly Digital PLIIx Movie here because the Arcam doesn't see the correct data stream by default.
I suspect that buried in the AV9 manual is exactly what you need, assuming that a test with a dedicated DVD player on the same input as the Sony behaves in the same way. If not, then perhaps you might have a duff Sony box.