Starting out. - need your counsel

Another good source for inexpensive Dolby Digital would be to use a receiver as your source. Most of these have 5.1 channel pass-throughs that remain unprocessed in the digital domain. I would recommend you look at the Outlaw Audio 1050 receiver. You can get one new for $500 from there website or sometimes find used ones for $350-400.
http://www.outlawaudio.com
The cheapest pre's that I have seen used are the Harman Kardan Signature 2.0 ($450 at ebay or audiogon but they all come from ubid.com) the sony tae-9000 (I think is the number also comes from ubid originally then to ebay and audiogon $700), and the Legacy Audio (is a proton) pre-amp that was selling on ebay for $275. I use a Denon 2801 as my pre (with rotel amps) and am happy with it until I can afford a dedicated system. Another idea would be to look for a older rotel pre that has a 25 pin connector and connect it to a rotel dolby digital decoder (about $500 for this but the goods are a little older). If you are concerned about ground loops then I would recommend the monster series of power centres hts 2000 or 2500. They can be had for 110-170 on ebay and they eliminated the cable ground loop in my system (this was the only product that would do it as I had cable that was not installed properly).

Patrick

A simple reciever with analog by pass sounds good. Will most recievers allow you to run separate amps through line output?

I didn't design the Lexicon, just used it...then sold it when i decided HT was a silly market and has way too many things to work out before I spend $$$ on it's gear. I have since sold the Lexicon for SF Line 1, and am happy as a pig in sh*t.

As long as the receivers have 5.1 out (most modern mid-priced receivers do) then they should work fine. You can also try ac4l.com for refurbished marantz products at pretty good prices.

Patrick

I recently upgraded my surround sound/HT system by replacing a Yamaha RX-V995 Receiver used as a preamp only and would recommend that particular unit highly as an affordable means to 5.1 processing. It's no longer made, but a lot of them were sold and I'm sure you could find a nice one on the used market - original retail started at 1K and declined to $800 when the replacement receiver was announced. It will decode DTS, Dolby Surround and Dolby Digital, has the 5.1 channel analog pass through, boasts remarkably good specs for the price, an analog volume control, and has 5.1 pre-outs to bypass the amplifier section of the receiver. (One of the few receivers in its class I could find that offered this feature). Also, for mass produced electronics, I have never encountered a company that builds stuff that lasts like Yamaha. I still use a turntable of theirs that I bought new in 1976. I know you said you wouldn't be using this for music, but you might want to look at the used market for some DTS music discs if you go that route. I have a few, and while not up to multichannel SACD standards, they offer a really expanded and improved music listening experience when the recordings are properly engineered. Best of luck with your search.