Try these settings:

Digital Audio Output: PCM
BD Secondary Audio: Off
DTS Neo:6: Off
Audio DRC: Off
Downmix: Surround
 

You may have to adjust your TV settings too. What specific TV do you have?

A Samsung TU8000. Thanks for your response 

Try setting HDMI eARC and Digital Output Audio on your TV to Auto.

Please help. I changed all the settings as you suggested but when playing a blu ray with DTS the Arc under my system shows pcm 2.0 stereo. The interesting thing is, however, all the channels are working on the Arc and my One SL's are producing sound. How can this be?

Does the audio sound like you are getting 5.1 surround sound? Is the dialogue only coming out of the Arc and not the rear surrounds? Does it sound crisp and clear and enveloping like a Dolby TrueHD Blu-ray does?

Also, what other options do you have on your TV settings?

When playing DTS through the Arc by LPCM every speaker on the Arc is working and so is my sub and surrounds, but on the Sonos App it shows pcm 2.0 stereo coming into the Arc. I am confused how I'm getting multi channel surround but the app says pcm 2.0 stereo.

I have tv on Earc and have tried tried digital audio output on auto and pass through but the sonos app still says pcm 2.0 stereo but getting multi channel sound 

What speakers on the Arc would work if I was only getting pcm 2.0 stereo?

You can still get audio coming through the surround speakers with Stereo 2.0.

Do you hear dialog coming from the surrounds? If so, is it just as clear and loud as the dialogue coming out of the Arc?

If you truly believe you are getting 5.1 PCM audio playing from your speakers, it could just be that the Sonos app isn’t displaying the correct type of audio because of an issue between the Samsung and the Arc.

While playing the movie, what audio does your Sony player display on screen when you hit the DISPLAY button on the remote?

What specific movie are you testing?

And every speaker on the arc would work if in stereo?

Yes, they could all be playing sound but it would sound like all the channels are playing through each speaker rather than separated channels.

I think I discovered that the problem is the inability for my TV to pass through multi channel LPCM but only stereo PCM instead. Any other suggestions on getting multi channel PCM with DTS? Thanks so much for all your help!

Sorry to hear it’s a TV issue.

Other than purchasing a new TV, the only other option would be to get the HD Fury Arcana eARC device. It allows your Sony UHD player to bypass your TV and play audio directly to the Arc. I have an older TV and this is what I use to get Dolby Atmos and multichannel PCM audio from my all of my Blu-ray Discs. It’s $199 but worth every penny IMO.