ATI HDMI Audio problems

I recently upgraded my HTPC running XBMC with an ATI 6490 video card.  My prior Nvidia card did not have a HDMI port and I wanted to start utilizing the HDMI HD audio features that are not available on an optical TOS link.  FYI this audio problem seems to exist across their entire line of HDMI cards.

I have not been an ATI customer for a long time because I never had a good experience with their drivers.  Well some things never change and ATI proved it this month.  Their driver stability is as legendary as I experienced years ago. 

I had to downgrade my drivers from 12.4 to 12.1 to get HDMI audio working.  The audio would start off ok until I switched inputs on my Pioneer VSX-1121 receiver.  I have HMDI controls disabled but the ATI broke something past version 12.1, the audio would go away with a red X over the sound icon in the system tray.  The error was “No speakers or headphones are plugged in”.  Once I would reboot the PC the audio would start working again until I switched inputs on the receiver.

To add to the complexity of fixing the issue the ATI installer does not warn you that it will not downgrade drivers.  It ‘appears’ to work but it actually does not overwrite older files.  I had to manually delete their busted drivers to get the older ones installed.