Hi @ssolomon31
Welcome to the Sonos Community!
I can only speak for Plex and the nVidia Shield Pro, as I have both, and Kodi as I have used it extensively in the past.
First, I’m surprised that your TV isn’t passing the codec compatibility list of the Arc on to the Plex app - I don’t know if this is supposed to happen, but it seems a no-brainer to me. The Plex platform is designed to transcode any format that the playback app can’t play on the hardware it resides on, so it would make sense for this to happen, though I suppose some technicality could get in the way.
You may be able to tell either the Plex app (ideally) or the Plex server to always output a certain codec, but this would limit your options - assume that you’d no longer get Atmos.
As for the nVidia Shield Pro, you can tell it to automatically choose the output format of anything playing, to match your hardware, or to select manually - any streams will be converted if needed. I have only tested conversion to Dolby Digital. This is done in the Android settings. The Shield has the additional advantage of AI upscaling of 720p or 1080p video to 4K.
Kodi can also convert down to Dolby Digital on-the-fly, and be told which codecs your hardware supports. You may need to put your Kodi settings into Expert mode to see these options.
I don’t have access to an Arc, however, so I cannot confirm that these settings will work with one, but I certainly don’t see why not.
Hopefully, someone in the community will assist, though I have to confess I’m not quite sure what the issue you’re experiencing is - your TV should be converting DTS to Dolby Digital for the Arc.
I’m also using Plex, Shield, and Arc, but I’m also using a HD Fury Arcana, so my TV is removed from the audio chain entirely. I also have to admit that I’ve never been all that concerned with the audio codecs for Plex movies, as I generally use Plex for old movies where I’m not all that concerned about the audio. I’m not even sure anything I have is recorded in DTS. For titles where I do care about the audio, I’m using a streaming service or direct from disc.