Regarding blu ray, I am under the impression that if I use a simple digital coax to my receiver, which decodes only DD and DTS, I will not get any Dolby TrueHD and DTS HD audio. My sound processor does have analog inputs, but via DB-25 connectors, which will bypass all but the master volume control. If I get a blu ray player that decodes the HD audio signals and use the analog connectors, will I be able to enjoy these formats?Lossless surround such as TrueHD and DTS-HD MA require too much bandwidth to be transmitted *digitally* over SP/DIF or Toslink. But your sound processor has 5.1 analog inputs via a DB25 connector. If you get a Blu-ray player with internal TrueHD and DTS-HD-MA processing and a back panel with at least 5.1 RCA analog outputs, you can indeed enjoy the benefits of lossless hi-def surround with your current gear.
To do so you will need to acquire two things:
1: A Blu-ray player with internal decoding of both Dolby TrueHD and DTS HD Master Audio
2. A special cable that has six color-coded RCA connectors at one end and a DB25 connector at the other. A few years ago, many cable companies made them, but as the number of surround components to use DB25 has dried up, so have the cables. A few remain; they're just not as easy to find.
You can get a DB25-to-multiple-RCA cable from this selection, available in lengths from 3-50 feet. You'll probably want a 3- or 6-foot one.
A good example of a Blu-ray player that fits your budget and analog output requirements is the Panasonic DMP-BD80. It has internal processing for the lossless codecs and a back panel with 7.1 analog outputs (in your case you ignore the extra rear surround channels). Just get a cable like the one in the link, and connect the RCA end to the Blu-ray player's outputs and connect the DB25 plug to your surround processor.