So, it looks like it is the AC3 Dolby.
When I hook my XBox or EyeHome to the Minidisc and use stereo, it sounds fine. But when I play a movie that I encoded with AC3, I get loud static and "no copy". The whole purpose of my buying this was to allow me to convert the digital signal to analog. I don't want to re-encode 100 movies. Is there any way around this problem?