i don't know the details of why you are getting the standby thing...but yes i would return it without hesitation. why keep the thing when it is broken and you are under warranty/30 days?
i would buy this one at costco;
http://www.costco.ca/Browse/Product....A&Sp=C&topnav=
avr 991 > avr 891
avr 991 has the same innards as the avr 3311, with a missing zone and the missing dual hdmi out. i looked really hard at the 991 but am going with the 3311 because i need that dual hdmi. there are some other differences but a quick search will tell you what they are.
cost wise, without the sale at futureshop, they are the same. costco isn't a denon dealer but the website says that they will take it back for the duration of the warranty...which would be 2 years iirc. i think a costco card adds a 3rd year of warranty.
just my 2 cents.