Seem like the chain you want is this:
1. Yamaha CD- player
Coaxial (Digital output) > MC331
Coaxial (Digital Input).
The CD player DAC is bypassed;
digital data is transmitted to MC331.
2. MC331
3.5mm (Analog Pre-out) to Denon receiver
RCA (Analog Input L/R) - for example CD/TAPE IN.
MC331 DAC convert the
digital signal to
analog audio and transmitted it to the Denon receiver.
The amplifier of MC331 will be bypassed; Denon Receiver will be amplifying the sound to the speakers.
Here's a diagram of the wiring.
Is this a better audio quality? Maybe.
You have DAC in all of those 3 devices that you can experiment with.
1. CD player Analog Out - > Denon Analog CD/TAPE IN (This uses the
CD Player DAC).
2. CD player Digital Out - > Denon Digital Input (This uses the
Denon DAC).
3. CD player Digital Out - > MC331 Digital Input - Pre-out -> Denon Analog CD/TAPE IN (This uses
MC331 DAC).
I just realized this is a year old thread after writing this. Oh well maybe it'll help others.