Will take a look at this as an alternative. Thank you.
If I ever win the Powerball I will invite you and Bill_Janssen over to help me install some B&W 900 series Diamond Speakers (They can then watch my wife shoot me.)
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Please not, keep your wife happy and yourself healthy. 
900’s huh………dang I need to upgrade my 805’s evidently 
Good to see you having a ball getting your system back up and sorted out, best luck with it mate.
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Andrew said it right at the beginning of this thread, if somewhat indirectly.
These AVRs are little computers, full of processing wizardry. They do it all in digital space, then convert to analog at the last possible moment in the preamp stage. They are optimized for digital inputs (HDMI).
This has two consequences:
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They have to have pretty good DAC stages.
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Most (all?) of them convert any incoming analog signal to digital using an A/D converter. Then feed it to their processing wizardry. Because they operate in the digital space.
So, suppose you connect an outboard DAC to the analog inputs. What’s happening? The source feeds digital to the outboard DAC, which converts it to analog and runs that signal through its preamp stage, when in turn feeds one of the analog inputs to the AVR, which converts that analog signal to digital, which then feeds into the processing and volume control (also digital) circuitry as a digital signal, which eventually is converted back to analog by the AVR’s DAC before being fed to the amp stage.
Multiple D/A and A/D conversions without some kind of careful coordination will almost always degrade a signal. So unless you’re certain this particular Sony AVR has a pure analog passthrough circuit and analog volume control, you’ll almost certainly lose with an external DAC.
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Unfortunately, the STR-DE985 doesn’t have HDMI inputs. It does have optical and coax digital inputs though…
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Interesting. I should have looked.
So, does anyone know what the processing path is, internally?
Thank you Bill, for that explanation. I am more the analogue amp type and thus not experienced with such a device as this Sony here. Interesting point.
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Geez Bill you’re right on the point. Possibly his receiver has an input that is direct thru bypassing the wizbang circuit to the amplifier. I have a newer Marantz AVR and feed my pro-ject s2 DAC into the cd input and select pure direct mode to bypass any Tom foolery. ASR confirmed that this was the way to get directly into the amplification circuit.
We were typing at the same time of course 
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More information on our subject of interest here:
Here’s the manual. This is apparently based on something called “Digital Cinema Sound”, so at some point it converts to digital, for at least some inputs. It has “2CH Analog Direct” mode, for at least some flavor of analog bypass. In that mode, only volume control and speaker balance are in-circuit. It’s old enough (the manual is from 2003) that both of those are arguably done in analog domain.
So I begin to think that an outboard DAC could work here. Again, whether the difference would be audible is another question.
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That’s the ticket I’d think to use the rca input for cd / SACD and the direct mode.
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Helpful review here:
Cleaning it up today, to start hooking it all up. You can see the “Digital Cinema Sound” on the front.
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Still with the stickers on the front 
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Actually, as a joke I had an Intel inside sticker on it at one point.
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She’ll be fine…….until you get the B&W’s
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She’ll also be fine after she shoots me, she can sell them AND collect the insurance.
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do not seduce him oh malicious one
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All kidding aside, there are wonderful speakers for significantly less money. But that’s a whole other story…