How to hook up Denon DVD 3800 to B&K 307

I'm some what confused how the processors work in each unit. If they both have processors for DTS, Dolby, 2 channel DACs etc. How do you know which one is better? Is it possible to use only one processor?
If you are sending the signal out via optical cable to the receiver, won't the receiver have to process the signal as well. Will the signal get processed twice, and if so will it degrade the sound?

How do I connect these two things up to get the best sound. I think the Denon has better processors than the B&K?

Anyone who understands this and cares to share their wisdom, I would appreciate hearing from you.

No wisdome here(duh?)The digital cable from the transport goes to the dig.input of the processor.This is for movies. Those other outputs work best for sacd/ dvd-a.---Ok, I read that in the rags;I don't own the equipment. If I had the options; I'd try hooking things up both ways /whenever possible---That way your ears are always worth more than opinions.---(people whom have read such and such.---Duh,for both of us. PS; there are a few recent threads on this subject/You shouldn't have to go back to far.
AVGuy is right....but your statement I believe not so good, the B&K processor IS better than the Denon. Use the Digital cable when possible.