When you connect a DVD player to your preamp or receiver with digital cables (either optical or coaxial), the digital data stream is conveyed directly to that device and the D/A converter in the preamp/receiver processes the data into the analog domain. Therefore, the codec in your Denon is not being used.

If you do want to use the D/A conversion in the Denon, you need to connect the analog-out (RCA connectors, usually) to the analog-in on the preamp/receiver.

A codec (also known as a D/A or A/D converter) ONLY takes audio from digital to analog or vice-versa. If no conversion takes place in the DVD player (i.e. the digital signal is transferred directly to the preamp), the codec in that player is not used.