You're correct. I didn't understand what you were saying. However, if synthesized sound is supposed to sound anywhere close to the real deal, then it falls waaaaay short, at least in my Genny (17 speaker). I use CDs (very few) 5.1 surround sound DVD-A, a flash drive, also my iPod.
Of those sources, the DVD-A 5.1 sounds best by a big margin. Next is the iPod. After that comes CDs, and lastly is my flash drive. The flash drive sounds equivalent to XM radio. It's noise, and it has a beat and song, but, sound quality isn't worth the time of day. My radio in HD sounds better than my flash drive. Dunno why as I'm not a recording engineer, just a used-to-be self-professed audiophile in the 70s-early 2000s when everything went to CD and lost the warmth and naturalism of black vinyl.
I firmly believe the flash drives and/or SD cards have a lot to do with sound quality. No proof, just my own ears, but, thanks for going into such detail to explain what these systems are capable.
If you think that HD radio sounds better than the files on your flash drive, then you have some crappy MP3 files on your flash drive. It has nothing to do with the format of the media.
Try ripping some CDs at 320Kbps using Constant Bit Rate. They will sound delightful in the Genesis.
Turning on the Surround mode for stereo sources not only adds delay but it also extracts phase and difference information from the two channels and moves them to the back. If a sound (say a guitar part) is panned hard to one side or the other, it will be louder in the rear channels. I have a Lexicon theater processor at home and it has the same algorithms in it as the Genesis. It can do some pretty special things with good stereo sources.
Also keep in mind that DVD-A 5.1 audio discs do not automatically 'sound better'. They are usually better because an engineer has gone back to the original multi-track tapes and remixed the album using modern equipment. Now they have 5.1 channels to move sounds into instead of just 2. There are some 5.1 mixes that are excellent (all the early Elton John albums for instance), and there are some that are horrific (Steve Miller's Fly Like an Eagle).
How the engineer chooses to utilize the extra channels can be different as well. For example, on Donald Fagen's first two solo albums, 'Nightfly' and 'Kamakiriad', the back channels have almost all of the horns and background vocals. Some people like this effect, some don't. On an album like the Eagles 'Hell Freezes Over', the back channels are mostly ambiance and reverb, simulating the bounce from the back of the concert venue.
For older albums, the quality of the original multi-tracks may not be very good .. or in some cases, the multi-tracks are lost or damaged. Therefore, there will never be a 5.1 mix available (Steely Dan's 'Aja') or the 5.1 mix will suck (Meat Loaf's 'Bat Out of Hell').
I won't get into the concept of 'remastering' now .. that's a whole different enchilada.
I am an audio engineer and have a large collection of both DVD-A and SACD multi-channel mixes, as well as some older quad mixes that have been transferred to surround formats like DTS. I'd be happy to answer any questions about the different formats.