Try swapping your HDMI cable for a known-good one. Of course, I'm assuming you're using an HDMI connection...
i don't think it's correct that you'll lose all the audio processing features if you use digital coax from your dvd, only the super-hd codecs (true hd, dts hd), which i believe require the higher bandwidth of hdmi. so a couple of ideas for you if you want to keep your otherwise-functional processor: (a) you could connect the hdmi out from your dvd to the processor and component out from the dvd to your tv, (b) you could forgo the hd codecs and connect the dvd's coax to the processor and hdmi directly to your tv, or (c) you could use an hdmi splitter (i.e. hdmi out from dvd into splitter, then hdmi splitter out to processor and out to tv. good luck.