Update...
I did some tweaking/experimentation on the weekend. Once again, to recap my setup - I have a Pioneer DV585A DVD player with onboard Dolby processing, but I find it rather flat and toneless. I wanted to send the full signal to my amp, but inputting 5.1 from the DVD player didnt solve the problem. As someone pointed out, for some reason, I was ignoring the digital out on my DVD player. I used a spare cable I had to connect the Digital Coaxial out from the DVD player to the Amp, and the sound is much cleaner/better and the full 5.1 output from the DVD player reaches the Amp, where the processing occurs. As a result, the sub's performance is much better - the room shook when the bus blew up in the Interpreter.
So for the moment, my setup is 5.1 with 5x B&W M-1 sattelites and a REL Storm 5 subwoofer, mated to a Pioneer DV585A DVD player and a Yamaha AX757 amp. I am running component from the DVD Player to the amp, and to the TV from there.
The sound from the DVD player goes via two sources - a 5.1 output (which I plan to use only for DVD-Audio/SACD sources) and a digital coaxial connection which I plan to use for music/movies. I have removed the 2-channel output to prevent confusion (in my mind mainly, am sure there is no interference at either end).
I have the choice of Dolby Digital, Prologic, PLIIx and Neo Cinema 6. Will have a play with the settings and see what suits the best. Till now, the PLIIx seems to sound the best - funnily enough!