Connecting DVD Recorder to Home Theatre- Audio problem

[Paul.Hesp]

I've tried everythng I can think of and really lost the plot now between the User Manuals for 3 pieces of Sony equipment!

I can't get any audio out of Sony Home Theatre DAV-DZ330 when connected to Sony DVD Recorder RDR-DC505. Picture is good, and I do get both picture and audio when I play a DVD, but there's no audio when the the Recorder plays content from it's HDD or the TV. TV screen shows "Speaker setting is Audio System", and Home Theatre display panel does NOT show "MUTING ON"- it has "TV" displayed. I've attached a simple diagram of what connections I've made. I can get audio from the TV speakers if I change audio output on TV.

Both are connected to a Sony Bravia KDL-40W4500 TV. Using an HDMI and SCART cable from Home Theatre to TV (connected to AV2 (Smartlink) and HDMI 1 respectively), and HDMI cable from Recorder to TV  connected to HDMI 2.

Come on guys, what am I missing here?