I am Penguin
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TV - 32" LG HD Ready LCD TV with 2 x HDMI inputs (32LG30)
HTS - Phillips HTS 3565 with 1 X HDMI output (for DVD/USB playback)
PS3 - New PS3 Slim (2 months old) - 1 X HDMI output
Ok, checked it out. I do not see optical in but there is only Coax digital in *2 on the receiver. Thus from the PS3 to the HT receiver you have a problem as the PS3 slim have Optical out but your receiver only have Digital coaxial in. Please confirm this as it depends on your model. Maybe you have an Optical in looking the same as the optical out on the PS3 slim.
Connectivity
•Rear Connections: HDMI output, Component Video output, S-Video out, Composite video (CVBS) output, Digital coaxial in 2x, AUX in, FM Antenna, Easy-Fit speaker connectors.
I also note there is a software/firmware update for your HTS system.
This upgrade is applicable for the following models: HTS3565D/37 HTS3565/98 HTS3568/51 HTS3568DW/98 HTS3568DW/75 HTS3568W/93 HTS3569/98 HTS3568/12
Firmware upgrade history
Version
Description
Version: V00.22.00 MCU: V10.08
Fix OSD Language Auto not working.
Improve Karaoke scoring
Improve overall HDMI CEC behavior
Improve system stability when playing certain JPEG files.
Version: V00.27.03
Improve HDMI CEC behavior
Improve overall system stability
Version: V00.32.00 MCU: V10.08
Improves optical-in sensitivity
Version: V00.34.04
Improve Audio performance for COAXIAL IN connection
Now there they say "Improves optical-in sensitivity" so in the model is there is differences. Please check if your Receiver have a optical in.