I did the tests. I'm not sure if my E17 has an issue, but the toslink input using the supplied adapter didn't work with signals from my blu ray player. It worked fine on my receiver, so I'm not sure what the issue is. It might not have been able to use the mix supplied from the disc I used, or the spdif in on the e17 just doesn't work. I primarily use it as a pc dac through usb which works fine, so I don't really care enough to look into it further.
Blu-ray discs commonly employ multi-channel audio formats such as Dolby Digital (AC-3 5.1), DTS and Linear PCM. The FiiO E17 can't decode those multi-channel audio streams. In the end you either end up with no sound or a very distorted noise.