ER Doc,
you should definately use the digital out for CDs.

If you used the analog out from the Sony then you would be doing DA coversion - using the Sony's inferior DACs - then AD & DA again in the 861. The 861 has no analog pass-through...

Note that this is what is happening with your SACDs & if your 861 AD card is a IA00 then the analog output is getting AD converted, internal to the 861, at 16/44...So you'd probably get better sound sending the SACDs redbook data to the 861 digitally. If you have a IA40 or IA45 things may be better.

Clearly for CDs if you go digital out from the Sony then the 861 will take this stream, process it and then DA convert using it's superior DACs.

Paul.