Sounds like you may have a bad HDMI card my friend. I had an issue with my HDMI card that was causing blue dots to appear on the dark parts of the screen, when outputting 1080p over HDMI. This is a rather common issue, so it wouldn't surprise me if your HDMI board needs replacement - especially if you've ever experienced the infamous blue dot issue.
I replaced all 13 100mF caps on the HDMI board as recommended in several online blogs. The switching now works, but the image flashes on and off.... I have heard this is a handshake issue with Onkyo's from the time era my unit was manufactured.
I just ordered a new Yamaha... I am done with Onkyo. Loved the receiver, but this should have been a callback and now I have a $1K AV receiver that is only good for audio.
On the onkyo you have set the HDMI setting for the output you want through the menu.
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