Is it possible to connect the digi002 to an optical out that goes to a
home theater system. I have hooked it up but just can't seem to get
the settings right...so far no sound. Any help would be appreciated.

Won't work unless you have a suitable decoder that will split out the
audio channels from the DVD player. Then you can connect those analogue
audio streams to various analogue inputs on your Digi002. The digital to
analogue converter in your 002 isn't a Dolby Digital or DTS converter.

I think he means going from the 002 to the HT. It should work fine. You
have to enable S/DPIF mirroring or specify the optical output. You won't be
able to get 5.1, only stereo.