The SPDIF issue is fixed - and I'm a dumbass.
Put in a BD and started up PowerDVD DX (had successfully played other BDs). It got stuck "Loading" so I went back to the menu. While poking around in settings I found the audio setting for output to SPDIF. After setting that I clicked on the update icon and it downloaded & installed, then rebooted. Now I can't play any BDs in PowerDVD DX. And the SPDIF option in PowerDVD DX settings is no longer available - it just has "Default" as the only option. So, I finally went to the Sounds control panel app and set the SPDIF dongle to be the default audio device like I should have right off the bat but no, I'm a dumbass. PowerDVD DX plays DVDs and now I get DolbyDigital & DTS to the AVR. It just no longer plays BDs.
Updated the disc drive firmware and still no BD.