Is a pre/pro considered digtal or analog ?

I agree with the above. I have a B&K Reference 20 preamp/processor that can handle digital or analog inputs and outputs. I used an optical digital cable from my CD digital out to the digital input on the preamp. So the digital signal from the CD does not get converted to analog at this point, it feeds the digital directly to the preamp as 1s and 0s.
But the preamp then needs to convert the digital signal to analog before sending the signal to the power amp. From this point on the signal's analog. Strangley, the sound is much better using the analog outputs from my CD to the analog inputs on the preamp. The difference is not subtle, analog sounds much more real and dimensional. I'm not sure why this is but I'm curious.

Lneilb,

Makes sense. Do you think I should stick with the analog or try a jitter filter? Thanks.

Treyhoss and Lneilb,

The B&K Ref 20 pre/pro does have a bypass which keeps the signal analog for stereo, but it converts an analog input signal back to digital whenever the DTS, ProLogic or other processing is selected. I only use processing for movies.
My CD's a Sony S7700 DVP which I bought mainly because of the CD quality. The front channel amp's an Aragon 4004MKII and the front speakers are Magnepan 2.7s with a separate sub that can be turned on/off as needed. I play mainly jazz, blues and rock, but not the harder rock stuff.
Is the sound good enough? We're always looking for better, right? I would like the "in the room" presence and depth to be better. I agree that a separate preamp with a HT out may be the best solution - using the B&K as a processor for movies only. Maybe a good tube preamp to see what I've been missing. Thanks you guys.