Sean,
That's a good way to go, in my opinion (EDIT - I'm referring to Post #15). That way, you can record a show even when your receiver is off (which you could not do if you had everything routed through your receiver). Actually, you'll want to route a video output from the satellite to the video input on the DVDR, as well.
With it connected in that way, I'd say reconnect the digital cable from the DVDR to the receiver. You'll definitely want that when you're playing things with digital surround sound. Set the audio setting on the DVR input to "Auto", and you should be good to do.
Something seems wrong, though, in that the sound is very low. Make sure that the DVDR doesn't have a mute setting or volume control. If you want, play around with it a bit, and if you still have trouble let us know. This is one of those times when some of us could get you all hooked up quickly if we were actually there, but it takes longer to do over the internet.
Adam