Hi Jonathon, you can use it as a DAC (as I do), although its use as a pre is limited because of loosing digital bits. I use a DEQ that was modified by Ric Schultz (EVS) in Calif. The outs are balanced and fed into a pair of Goldpoint series attenuators that I installed inside the rear of a pair of Monarchy SM-70 Pro amps used as balanced mono's. (No remote and a CD-only sourced system, but the sound is great and the system is very revealing). If needed I can use the main input to fine tune the volume, but mostly this is not needed except when I find a CD that's been recorded much too loud - then I can reduce the main input on the DEQ to dial out digital clipping. When I tried using the DEQ as a dedicated pre, I found I could reduce the input as low as about 7 or 8 db before I began to notice some darkening of the sound that told me I was throwing away too many bits. This was also too narrow of a band of volume adjustment for my rig. It should pass along the signal from your transport to your amp in this configuration, however.
Dunno exactly about the CD vol. out problem. Make sure you have backed out of any and all test modes. If you need to you can check the instructions (I think) and select a reset function that will at least get you back to square one, but you will loose all EQ settings, of course. Let me know if there's something else specifically.