Looking for an opinion on the best connectivity option. I currently have 3 sources in my bedroom connected to a Sony 32XBR via HDMI - an Xbox360, BD player, and DTV HDR. The Sony offers both coax and optical digital out. I am better off to connect to the TV via HDMI and then out to the SB16 from the TV via coax, keeping audio in the digital domain all the way to the speakers? Or should I run a connection from each source directly to the speakers, bypassing the TV audio handling altogether?
Also, if I go with the first option and run everything through the TV, could I improve the sound quality by inserting a good quality DAC between the TV and the SB16. I haven't read anywhere what DACs the SB16 used on the digital inputs but there are some pretty decent ones out there in the $100-200 range, I think.