When the C-200 was first released at the end of August, Syabas admitted that the firmware wasn't quite 'there' yet, but that their commitment to progressing the firmware was not in doubt. This commitment hit a snag when it became apparent that the software development kit (SDK) from Sigma, the manufacturer of the excellent 8643 chipset at the heart of the C-200, was incomplete. This meant, to an extent (I don't know how much of an extent...), that Syabas' hands were tied, and that only certain firmware improvements would be possible until a new and more complete SDK was delivered. This new SDK was promised to Syabas a couple of weeks ago and, the last I heard, it was late.
My point being, Syabas have a proven track-record of getting their firmware bugs fixed. And once the new SDK is available, I would like to think that these audio problems will be solved ASAP. Because, frankly, they're a pain in my ass...
Yes, it's a known problem and often happens with Universal titles and some other titles where there is a picture-in-picture track. My theory is that the player is switching to PCM so it can mix th main audio together with the Bonus View audio, which unfortunately it doesn't then do!
Do you have a 7.1 setup and are any of your movies in 7.1? It would be very interesting to know whether in Analog/PCM mode the C-200 is sending out 7.1 channels (rather than 5.1 live channels and 2 empty channels). If in that mode you get sound out of all 7.1 speakers that would suggest that the C-200 is properly decoding the full HD audio information (since the legacy codecs only go to 5.1) and the problem is less severe...