Try these steps to enable "non-decoded HD audio to external device"
1. Insert a Bluray disk
2. Press play button, then the Bluray is playing
3. Press pause
4. Check audio settings in PowerDVD
5. The option is poping up under the HDMI mode if the disk and your device all support Dolby TrueHD or DTS HD Master audio.
Note
If you are using AMD graphic cards, please make should you have upgraded to the PowerDVD 10.0.2429 patch(released on 2010 Jun 5th) or later.
http://www.cyberlink.com/downloads/support/powerdvd/patches_en_US.html