I have the same issue with OS X Lion GM, Digital Optical Audio doesn't work with VLC but it worked with XBMC...So, it _is_ an OS problem in X.7It is not an OS problem I had 10.6.8 before the GM build and it worked fine in VLC for all audio including DTS and dolby when going out optical.
I had the same problem with the latest VLC 1.1.11 update, (Encoded Output) missing. Lucky for me that I kept a backup of the past several VLC releases. I tried rolling back to 1.1.10.1 and the (Encoded Output) is back, decoder detects the output fine now.I'm on Snow Leopard 10.6.8, no Lion here, and I have the exact same problem as Gave Gast described. After the VLC 1.1.11 update, VLC plays back PCM and doesn't take over the S/PDIF output to send the encoded bitstream, even if configured to do so. Under Audio > Output Device, there's no more "Built-In Digital Output (Encoded Output)" entry. Note to ppl: You have to have a file playing for the "Output Device" menu to become available...
On VLC 1.1.10.1, the encoded output worked, but once VLC took over the bitstream and stopped playing back, the OS wasn't able to take it back: My Yamaha Decoder was reporting no bitstream at all, neither encoded nor PCM. I always had to put the Mac to sleep and wake it back up for MacOS to output it's PCM stream to the decoder again... VERY annoying. I fear it's a combinatory problem between the APIs VLC uses and the OS not being very good at optical digital audio out...
If you stop and start, VLC doesn't use the optical out again. It falls back to PCM.Not sure if anyone solved this yet but this works for me:
1. Double click the movie you wanna play. It opens in VLC but with no sound.
2. Press stop
3. Press play and it now plays with sound.
Tried it on DTS and AC3 files, seems to be working. Superstrange but easy enough
Hope it helps, cheers!
Did you delete the preferences, too? If I use any earlier version of VLC, the problem persists. But I only switched the program itself (overwrite in application folder)....had to roll back to 1.10.1 to get my audio back to normal again...
I have Early 2011 MacBook Pro, so I tried AppleHDA.kext version 2.0.2 from "Mac OS X v10.6.7 Update for early 2011 MacBook Pro" http://support.apple.com/kb/DL1368. Apparently it wasn't compatible with Lion because I lost all sounds i.e. no audio devices were found.
Funny that XBMC works but even Apple's DVD Player doesn't.In the mean time use XBMC until VLC is fixed.
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