Lkdog,
I must caution you against buying a new DAC for your system. My return to 2-channel audio was through home theater, so I went through a similar process to yours. I enjoyed watching movies, but my primary focus was music, so I wanted to improve my 2-channel (music) performance.
Unfortunately, budget-minded receivers like your Denon AVR-1801 do not have an analog bypass circuit. In other words, your new DAC would output an analog signal which would then go into your receiver. However, the receiver converts all incoming signals back into digital to allow for digital volume control and digital surround processing (DTS, Dolby Digital, etc.) Thus, you are still relying on the DAC in the Denon for the final analog signal that will go to your speakers.
If you are serious about improving your music performance, I would look into a good, used 2-channel pre-amp to use with your Parasound, thereby taking the receiver out of the 2-channel loop. You can then input the DVD player (or new DAC) into the preamp, and connect the preamp to your Parasound, then the speakers. The movie output (via the TOSLINK) will still go to the receiver for processing and then the center and rear channels. I hope I am not confusing you, but you really can have the best of both worlds (with some compromises, of course).
If this is a larger bite than you can chew right now, a simple, cost-effective upgrade would be to buy a good-quality, used coaxial cable to connect your DVD to your receiver. I think you will find an improvement over the TOSLINK.
I realize that the complexity of combined HT/2-channel setup can get confusing, but it can be done with decent results. These are some of the lessons I learned (the hard way) when I was in your shoes. I have since seen the light, and have whole-heartedly converted to the purity and resolution of 2-channel! Can I get a witness? AMEN!
Enjoy your system, and remember - HAVE FUN. Good luck.
Mark
I must caution you against buying a new DAC for your system. My return to 2-channel audio was through home theater, so I went through a similar process to yours. I enjoyed watching movies, but my primary focus was music, so I wanted to improve my 2-channel (music) performance.
Unfortunately, budget-minded receivers like your Denon AVR-1801 do not have an analog bypass circuit. In other words, your new DAC would output an analog signal which would then go into your receiver. However, the receiver converts all incoming signals back into digital to allow for digital volume control and digital surround processing (DTS, Dolby Digital, etc.) Thus, you are still relying on the DAC in the Denon for the final analog signal that will go to your speakers.
If you are serious about improving your music performance, I would look into a good, used 2-channel pre-amp to use with your Parasound, thereby taking the receiver out of the 2-channel loop. You can then input the DVD player (or new DAC) into the preamp, and connect the preamp to your Parasound, then the speakers. The movie output (via the TOSLINK) will still go to the receiver for processing and then the center and rear channels. I hope I am not confusing you, but you really can have the best of both worlds (with some compromises, of course).
If this is a larger bite than you can chew right now, a simple, cost-effective upgrade would be to buy a good-quality, used coaxial cable to connect your DVD to your receiver. I think you will find an improvement over the TOSLINK.
I realize that the complexity of combined HT/2-channel setup can get confusing, but it can be done with decent results. These are some of the lessons I learned (the hard way) when I was in your shoes. I have since seen the light, and have whole-heartedly converted to the purity and resolution of 2-channel! Can I get a witness? AMEN!
Enjoy your system, and remember - HAVE FUN. Good luck.
Mark