Re: 7.1 surround not working
Although I rarely use Sony receivers, I can offer some general advice. The lights usually indicate discrete channels of audio present in the source material.
Either your player has some settings that are off, or more than likely, your disc isn't outputting discrete 7.1 information. The disc menu might need to be adjusted, or as has previously been mentioned, many discs simply weren't encoded with discrete 7.1 info. This doesn't mean that you won't hear all 7 speakers playing, depending on the chosen surround mode.