No surround sound from Marantz-Paradigm HT after upgrading from dvd player to bluray‏

I have been using my Marantz SR5200 receiver and 5.1 Paradigm speakers
with a Panasonic DVD player for past several years. With the optical
audio output of the DVD player connected to the receiver's optical
audio input, I was able to hear good surround sound from all speakers.
Now I have upgraded to Samsung BD-P1600 bluray player and the optical
audio output of bluray player is connected to receiver's optical audio
input. When I play a DVD movie in the bluray player and the player is
setup to output a PCM signal, I hear only stereo sound from the front
2 speakers. When I change the blueray player setup to output bitstream
(reencoded), I get surround sound, but the volume from the speakers is
almost inaudible. Is the Marantz receiver not compatible with the
blueray player? If not, how can I correct this?