In either case, it seems to be a malfunction.
The first place I'd look is where the signal is being decoded (The DAC). It sounds like it's pumping out too high a voltage for the analog stages to be able to handle.
If you can use the DAC in another unit, give it a try. That's to say if you are feeding a digital signal to the receiver (most do) but the source has MC analog outputs (some do) and the receiver has analog inputs (some do), that would be where I'd try first. Use the sources DAC.
Of course, if those options aren't possible, perhaps a two-channel analog output from the DVD into a high-level input on the receiver could help isolate the problem. If it goes away, you know there's a definite problem with the receiver's DAC overloading the analog sections. If not, well...
[edit] If you have a CD player with digital outs, you might want to try that with the receivers digital inputs. Since you say it even does it in stereo, if the problem goes away, it may be the DVD player, not the receiver.
Always try to isolate the problem before replacing things. You might save big $$$ that way.