Well...the 9865 has 6 tuners. If they are all available go for that one, otherwise you'll see no real difference.
The newer one...
8742's are obsolete...
If you're a new customer, Spectrum won't activate 6 tuner DVR's or even supply them.. I'm surprised that you have a choice, it's unusual...
I use optical audio out and it works. /Dan
I find it easier to use HDMI to connect everything to the TV, then use HDMI or optical to connect TV to receiver.
Use the TV's ARC out port to go to the receiver...