Direct TV Audio to DAC?

I run a digital cable from the digital out on my satellite TV receiver (they have XM Radio) to my Dodson 218 DAC, then into my Wyetech Opal pre. The sound is mediocre at best.

Not being a video person, I only recently realized that the audio signal running from the receiver is analog, noty digital. So, my questions are:

1. Am I diminishing sound quality by running from digital out to my DAC, or ahould I,

2. Run from the left and right audio out on the receiver directly into my pre, or

3. Does it make a difference?

If this sounds confused, it's because I am. Appreciate your help. XM has some decent stations but the sound really is not good.

nglazer probably won't make a difference. I run digital out too my DAC also. I can't listen to those stations on the is very compressed. I think you'll find internet radio more to your liking. It's not CD quality ,but it is much better than the XM junk.
I listen to XM through my Direct TV reciever quite a bit and I have tried it both ways. I find that the quality of the sound improves when using a "good" set of RCA's directly to my pre.
Thanks, I'll try the RCA's ( I have an old long pair of Pure Note Signatures)and see if it makes any difference. If the DAC is notr doing anything, a more direct connection in theory should be better. Not hooked up yet to get satellite radio through stereo. Squeezebox is next phase.