"What happens is that both volume pots are fuctioning! I talked to intergrated company today and they assure me this will do no harm to intergrated."
Yes, unity gain. Should be harmless, unless its severly overdriven, in which case you would certainly notice. No worries but a little bit of a pain to balance the two controls.
You're right, the Denon Preamp is (more than likely) degrading the sound. Which is why I recommend removing the Denon from, if nothing else, that particular loop in your system.
You will need to run Analog L/R outs from the DVD player straight to the Intergrated (Using a another input). Thus bypassing the Denon altogether but you would then be relying on your DVDs DACs and output stage. This is a cleaner/straighter wiring scheme and potentially better but only if the DVD player is up to the task.
Some gear will alow different (maybe better) solutions but I am not sure of which models we are talking about. A DVD player which has a good analog section could be just fine hooked up the way I previously described. And BTW, is exactly how I have my DVD player hooked up.