This pioneer does not support HDMI, so for the best resolution you have to use video the component inputs and output, those are marked as Y (green), Pr (red) and Pb (Blue) and remember, this signals are only for video so you need to hook up the audio too.
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Without additional equipment it can't be done. As i see your VR-606 pure analog device, and you trying to somehow use 5.1 sound from HD STB that is on HDMI put on RCA connectors of your VR-606. It is impossible without converter from HDMI to Analog audio or something likethis, best way to buy new receiver with HDMI input and TV neither Receiver with HDMI out oportunity. Then you will have your home cinema. In your current setup probably you can play only with stereo from your stb.
This looks like a great receiver for its day. I think you can keep it in service until you get into SACD, DTS or some of the other nearly obsolete but awesome audio formats that exist.
Most people use modern AC receivers to also manage video switching between multiple digital video/audio sources such as HDTV and Blu-Ray. Personally, I run mine with the videos going straight to different inputs on my TV and the audios going into different inputs on my receiver. Yes, I have to switch two things whenever I switch video sources. Life could be MUCH worse!
In actuality, there is little real need to have the TV attached to the receiver for much more than a basic video output, which this unit has, so you can observe its On Screen Displays, mostly for setup.
To address your unit and modern TV's... your limitation appears to be that it does not have an HDMI port or two for those possible hi-end AV inputs that you have not mentioned owning. If you do have them you'll actually have to do like I do and think a moment when changing video sources. The horror! As I said above, I would not consider that a show-stopper. The three digital audio inputs (two coaxial and one optical) might be plenty and of the right types for your equipment mix, but there are no 5.1 analog ins or outs for the real high-end audio formats, but you may never want nor encounter them. You can probably live without 5.1 analog.
Without knowing more about the TV in question it's hard to answer what the Best Buy guy told you. If the TV has a standard S-video or composite video input this receiver will work with it for basic video and your other HD/DVD sources can fight for whatever inputs the TV has available.
Best Buy would probably like to sell you a new receiver but I think you'll keep this one online for awhile.
Connect the HDMI outputs on your various components to the HDMI inputs on your receiver. Connect the HDMI output on the receiver to the input on your TV. HDMI incorporates digital audio, so no need to buy optical audio cables. If your receiver does not have HDMI inputs for all your components, you will need to make a choice. HDMI = Best, component video + optical audio = second best, S-video+ optical audio = third best
the avr-588 apparently cannot carry sound via hdmi - don't know why; just what i found out from the geek squad at best buy; solved the problem by connecting optical cable from cable box to receiver; be sure to change the input on the receiver for opt-2 (system setup >2 inputs) to correlate with tv
tell cable box 480 i putput not 720 p even tho big screen has hd inputs its not true hd ok unplug plug back in see if get cable box to defult u or take card in front in and out most likely tv cant handle 720 p or 1080 i if its on 1080 i bring to 720 still no pic tak ethe cable box out settings to 480 i ok try that 1st
best set up if you have all hdmi is to have all your components go into the receiver ie. hd cable box, dvd etc. by using the hdmi output from the player(s) to the hdmi input to the receiver. next use one hdmi cable from the receiver to the tv then your laughing.