I have now read the CXC User Manual. It is pretty brief as the transport offers only basic features. However I did note that there is a set up mode which displays a menu of options. The guide does not reveal exactly what those options are but it may be worth checking this aspect to see if anything has been selected that could result in your issue.
One other thing occurs to me. What you describe could occur if you are trying to play non-standard CDs e.g. a CD-R of , say, MP3 or other rips.
Incidentally the manual is specific that the TOSLINK cable should be intended for audio use. I don’t quite know what they mean by this but there it is.
The synch issue would be unlikely to produce this problem. Selecting the incorrect one should not produce a Non Audio message. It should play but you may encounter synchronisation issues such as glitches or just poorer than ideal sound. In any case that selected seems to be correct.