I don't have a Touch but a MW Transporter ... I assume you are running Squeezebox server on a pc. In the Settings page, I think it's the Audio tab, set digital volume to 100% fixed and now you can use your preamp or DAC to control the volume.
If it's variable and since volume is in the digital domain, you will lose resolution.
If it's variable and since volume is in the digital domain, you will lose resolution.