Just got a playstation 3. My receiver doesnt have HDMI but does have an optical out. Would I be better to buy the Component cables and use the optical out or can I use and HDMI cable and still use the optical out. Can you even use and HDMI cable with an optical cable?

That is how I have mine set up.
Optical audio (to surround receiver); HDMI for video (to TV)

On the PS3, look for an Audio setting that allows you to specify whether audio will be via the optical connection or HDMI. You need to set that up, then it will work just like you want it to.

I'm using HDMI out for video only, optical for audio.

I believe some are even using component for video and HDMI for sound.

My receiver only has one Optical port. My HD-DVD is already plugged into that. Can i run the optical cord from the playstation to the Optical port on my TV? If so, what do I set the playstation to, to pick it up?

The setting would have to be in the TV. See if there's anything about matching the optical input to a video input (if it can be changed at all). I have a feeling it would be tied to something else like a component input, but check the manual and see.

You'd be better off getting an optical switcher that would allow a second optical connection to the receiver, since you'd obviously be missing out on surround sound by connecting to the TV. Connecting to the receiver would almost certainly result in better quality sound as well.

Here's one at Monoprice: http://www.monoprice.com/products/pr...seq=1&format=2

Or, you could see if your receiver has a coaxial digital input. If so, you could get a converter that would allow you to use that: http://www.monoprice.com/products/pr...seq=1&format=2

I'm assuming your HD DVD player is one of the models that doesn't have coaxial output. If not, hook that up to coaxial and use the optical for the PS3.

The coaxial digital input is the orange one on the back that says DVD coaxial correct?

Yes.