I'm half-way through typing this post and I feel the need to apologise for my lengthy posts on this subject. I'm just trying not to skip any details. I hope it's helpful....
I'll give you the TL;DR here though: I don't think that all-channel stereo is what you're after.
...anyway, back to the surround fun
Well, I can tell you how the receiver knows, when you send dolby/dts/etc - when it receives the digital signal over the IEC958 optical connection (TOSLink/SPDIF) a part of that digital signal is a description of the content, so the receiver isn't 'figuring it out', it's being told.
However, most high-end receivers - which yours is - can also 'figure it out' - basically when the signal on the inputs reads zero, it assumes those channels aren't in use and switches to the correct mode appropriately. In that case it will toggle to the mode configured at the receiver.
I think this is your issue here. Because you've selected stereo all-channel, it will take a stereo signal and output it to all channels. It will ONLY ever pay attention to the left and right channels, regardless of whether it is receiving analog or digital, stereo or surround, over HDMI or optical or copper cables ...... No matter what you send it, it will send the front left channel (or just left if stereo) to the left front and left rear speakers, front right (or just right if stereo) to the right front and right rear speakers, either nothing at all or a mix of left and right to the centre speaker, and the same (probably after a lowpass filter) to the subwoofer.... This is stereo all-channel; stereo content, on all speaker channels
That's fine and a good way to listen to stereo content especially if you're an audio purist and do not want your receiver to apply DTS or dolby algorithms to translate 2-channel into 6.... but it won't handle any kind of surround content well at all. If it does get surround content, it'll just never use the other 4 channels (centre, rear l/r and sub) which can sound really really bad (especially if it's ignoring centre channel since that is supposed to carry things like all the dialogue in movies!). That can happen even if you see it light up the dolby logo to tell you it's receiving Dolby surround from your PC.
This part of the dolby/dts world gets confusing, because that name actually means a few different things. It refers to the encoding of multichannel content over a stereo cable, it also refers to taking stereo content and upmixing to surround, and it also refers to taking surround content and downmixing it to stereo. A quick list to give you an idea what I mean:
https://en.wikipedia.org/wiki/Dolby_Lab ... t_a_glance
So, even if you see that dolby light on your receiver, doesn't imply that surround is working. Sometimes it may just mean that the system is receiving dolby encoded audio at the input. Or it might just mean that it is applying dolby algorithms to process whatever input it has. It might be both.... The meaning of the lights and display content differs from one receiver to the next. Super confusing, and I'm afraid I just read the PDF manual for your receiver and it didn't really cover this topic. I feel like there might be a bigger manual I haven't seen yet, so if that thing came with a fat book, enjoy your reading for the evening
There is good news I can give you here though - there is one easy way to make sure it's working. Use the speaker test in windows' sound control panel. The trick here is to make sure of TWO things: When you click on the icon of an individual speaker to test it, you need to check that sound DOES come out of that speaker, but also that it DOES NOT come out of any other speaker.
If you click one speaker in that test window, and you hear it on any of the other speakers on your hifi, then what you are hearing is the hifi manipulating its received source material into a different configuration.
The endgame:
One of the big advantages of having a PC as your sound source is that you are offered an incredible potential to manipulate any media with any audio in any format and intended for any speaker configuration, into any desired output. I recommend you take advantage of that. What I mean by this is, rather than have your hifi automatically detect the source media based on the signal from the PC, have the PC always treat its outputs as whatever the actual configuration of speakers in the room is. If you have two left two right centre and sub, you have 5.1, you have 6 audio channels, so send 6 discrete audio channels, always.
As for handling source media which doesn't have this many channels, such as stereo music? Let the media player deal with that. It's FAR more flexible and controllable than anything you can get working on the hifi. You can choose to use an all-channel stereo approach, or just not use the surround speakers, or go for 2.1 or 3.1 or whatever you want.
As for handling media which is natively encoded with proprietary formats (Dolby/DTS), let the player decode that into discrete channels and output it as such.
As for discrete multichannel audio (rare) just output it as it is.
It's important that people understand what you told them!
Down from there you get lower end solutions (optical, compressed, and software driven thus no good for timing-critical use cases like ours) and up from there you go into discrete multichannel DACs ie uber expensive recording studio devices (M-Audio probably the cheapest around) or HDMI audio de-embedders if you want to get the DAC out of your receiver (probably not necessary with a nice receiver)