I have tried a coax digital cable and an optical between dvd and reciever but no sound. I can get sound using composite cables---have not tried component. Is there something wrong with reciever? It was open box from CC. Any tests I can do?
I think you need to do a bit of clarification here. I am very confused. You say you use composite and you get a sound? This is not possible as composite (the yellow coded cable of the red, white, and yellow rca cables) is simply a video signal, not both. The same is true of component and s-video...no sound is sent through these cables...that is why you have to use some other sort of audio cables in addition to the video cables. The only thing I can think of to test your problem is to check the settings on your receiver. I am not familiar with the 325, but there is probably a way to assign digital inputs for each source (i.e. "DVD"). Make sure you assign the "DVD" source to have the "Digital 1" (or whichever you are using) input.
Check the settings on your DVD player. You may have to configure the DVD player to send a digital signal. I have a Sony and had a similar experience. I was getting audio with analog cables but not when I plugged in a digital coax. I went into the DVD player's settings, set it for digital ooutput and my HK 430 then detected the digital signal and Bob's your uncle.