Separate DAC vs. A/V Receiver DAC

I'm just starting to "build-up" my system and could benefit from everyone's expertise. I'm rather new to all of this, so there are some "technical" aspects that just aren't clear to a newbie like me. :)

I just upgraded from a CDP to separate transport and DAC (both Theta). The signal is passed into my old (4 years) A/V receiver. The receiver has its own on-board DAC.

This is where I get confused. If I pass a digital signal from CD, LD (AC-3) or DVD through the Theta DAC and then output from the DAC to one of the Digital Inputs on the receiver, what happens to the signal? Does the receiver "process" it again? Does this defeat the purpose of a separate DAC? (I can't find reference in my manual to over-ride or by-pass the receiver's on-board DAC.)

In practice I will output the CD signal from the Theta DAC to the analog inputs on the receiver, so I can address that part of the equation. But, if I want to use the Theta DAC for my LD player or DVD player and have Dolby Digital (5.1) recognized, don't I have to utilyze the digital inputs on my receiver, thereby introducing the signal to the receivers DAC? Should I just forget about the Theta DAC for the LD and DVD and input these components directly to the Receiver?

(I know that one answer is to upgrade my receiver to separate amp/pre-amp to have greater input flexibility, but I'll need to live with my current receiver for at least another year before I can afford that upgrade.)

I'd appreciate any advise you can give. Thanks for your help.

Hi Bournnw,

Sounds like you answered your own question for the most part. To decode multi-channel digital information you'll have to use the DACs in your receiver (i.e. bypass the Theta entirely, since that's only for stereo digital sources), so I see no reason why you'd want to send that signal through the Theta DAC since it's not doing the processing. However, if you want to use your DVD player to play stereo sources (i.e. CDs) you can certainly use the digital out into the Theta DAC for that, but I don't know why you'd want to do that since you have a superior Theta transport available for that already.

So basically, your multi-channel digital sources should go directly to the digital inputs of your receiver, and your stereo digital sources should go into the Theta DAC and its analog outs to the receiver. Hope this helped.

Thanks! Your answer is very helpful and makes total sense. It'll also save me some $$$ on interconnects!