Maybe I've been misunderstanding :
I thought Bitstream was the raw data has encoded already. So, you shouldn't be able to select either DD or DTS ?
What if you're running a DD track or stereo track with output Bitsream DTS - or vice versa ?
Let me go check my Xbox settings as well
If you select DTS or DD the Xbox One will convert all audio (not already using the selected codec) to the selected lossy format and output it as such.
If you select PCM/Uncompressed the Xbox One will decode the format (if necessary) and pass it along unaltered. On console PCM/Uncompressed is the better quality audio option.