I am beginning to think this particular LG doesn't support external audio options which i cannot believe but I guess it possible.
It doesn't support HDMI ARC (not that I have found) which has led me to using the Optical cable. There isnt any options under the Sound settings that I can see that leads to audio output. The options I have in the Sound menu are:
Auto Volume
Clear Voice II
Balance
Sounds Modes
Standard (User)
Infinite Surround---this can only be used if Clear Voice II is turned off
Treble
Bass
Reset
TV Speaker