when I connect the optical out of my Toshiba TV to the Optical in of my Teac home theater, I only am able to chose Pro-Logic on the teac, which only gives me Front L and R, center a sub ...no rear surround sound ... is this some type of setting problem?
Check that the TV is set to output in bitstream.
Choose a TV channel that is Dolby Digital and content that is likely to have surround sound. Most movies will not use the rear channels most of the time. Only when the director wants you to get that effect.