Help - trouble connecting dvd through AV receiver

Hello
I just bought a new receiver (Pioneer VSX 1016) and I'm having some trouble connecting it. I tried to connect it with scart from dvd (Sony) to s-video + LR audio into the receiver and vice ersa, with s-video + LR audio from receiver into the TV scart. The trouble is I get audio but no picture/video signal. My TV is Sony KV-XL71K.
I checked TV manual and it was of no help at all. My receiver is connected to JBL SCS 260.5 speaker system and everything seems fine. I tried to connect the dvd directly to tv with scart and it worked ok, but I was told there would be a better picture quality with s-video cables (interconnects scart--->s-video + LR audio).
Can someone please help with advice as to which connection is the best and working?

I'm considering buing a new dvd player also Pioneer 696 model. It has a hdmi output and my receiver also supports hdmi in/out. Would I be able to connect the dvd player via hdmi to receiver and what cable would you recommend from receiver to TV which has only scart?
Thanks a lot!