what is the right audio setting with dv-47ai?

When I play dvd, the picture quality is very good, but audio portion is less than par. It sounded like that is a blanket hovering around the speakers. I tried playing around with the settings, no noticeable improvement. Your advices and feedbacks are greatly appreciated. Here is my system:
Rotel 1095
Rotel 1066
Pioneer Elite dvd dv-47ai
mitsubishi 55 hdtv
B&W Nat. 805
Lat International component cable
MIT Terminator 3 interconnect
Tara Labs Toslnk digital cable
RGPC 400

Have you allowed it to break in? I was skeptical about break in time myself but after 100-200 hours it sounded like the "blanket" was lifted.
I gather that you are talking about the audio which comes from a DVD-video. How does it sound with DVD-A or SACD?
Hi Audire, the dvd has not break in yet, I have about 20hrs on it, you have a good point. However, my friend just reminded me that the audio should be coming from the multi-channel output instead of analog from the preamp which is what I am using. I don't know if this makes any sense.
Eldartford: I have not try dvd-a, but sacd sounded great.