What's the diff. between preamps and processor?

If you have a dvd with DD and DTS and a prologic only processor, do you need another seperate with AC-3?
You need a processor capable of decoding DD and DTS. That processor can exist in the player, in the receiver or in a stand-alone processor box. If the latter, you probably also need a pramp/receiver with 6channel analog input.

First, AC-3 and Dolby Digital are synonomous - they are the
same thing. [ Actually one refers to the codec and the other
the implementation of that codec, if you want to get real
technical. ]

A Prologic only processor takes a 2 channel stereo signal
that has surround information "matrixed" on it and strips off
the mono surround channel. It also derives the center channel
signal from what is common to the left and right channels.

DD (AC-3) and DTS are 5.1 channel formats. Each has 5 "full"
bandwidth channels - left front, center front, right front,
left rear, right rear - and a limited bandwidth subwoofer
channel [ that's the .1 ]. This is all compressed into a
single digital data stream with MPEG compression.

You need a DD/DTS processor to uncompress this digital data
stream and separate out all the discrete channels. A Dolby
Prologic "processor" is not going to do that.

Dr. Gregory Greenman
No, you don't need a pre-amp with digital decoding if your dvd has this decoding. HOWEVER, this will only work if you have 6 channel input into your pre-amp and want to run 6 interconnects. It's a heck of a lot easier to run a single digital cable.