You're not "looking at it the right way".
The DAC is the actual part that converts digital into analog.
So, for a given device, if you have digital going in and analog coming out, the you are using the DAC in that device.
So, for example, a Blu-Ray disc, or DVD, or CD, is digital, and the Oppo has both analog and digital outputs.
Therefore, if you are using the analog output, then the digital stuff is being converted to analog inside the Oppo (so you're using the Oppo's DACs).
And, if you're using the digital output on the Oppo, then something else must be doing the conversion (the processor; so you're using its DACs.)
(And, yes, the HDMI output is digital for audio.)
(And, just to be clear, if you're using the digital outputs on the Oppo, then you are
NOT using the Oppo's DACs.)
However, there is something further involved, which may be what you mean by "the processor DAC overriding the other one".
If you were to take the
ANALOG output of the Oppo, and connect it to the analog input of your processor, you
MIGHT end up hearing the Oppo's DAC.
(Logically, since the signal is already analog, you don't need to convert it to analog in the processor.)
HOWEVER, virtually all processors do all their processing digitally.
Therefore, if you want the processor to do
ANY processing, it is going to have to convert that analog input back to digital, do the processing, then convert it back to analog again.
And, at that point, you are "hearing" both the DAC in the Oppo (on its analog output), and both the ADC (analog-to-digital converter) and the DAC on the processor, because the processor is doing two more conversions.
(You are actually hearing "the worst of both DACs" - since any colorations introduced by each are added together.)
Some processors, like our XMC-1, offer "analog only" modes you can use if you have an analog input and don't need any processing done.
(Others convert
EVERYTHING coming in to digital, then back to analog again on the way out.)
Situation: My equipment (OPPO CD/DVD) is hooked up to a DAC, say a DC-1, and the DAC is run to my processor, say a PT-7030.
Question: What keeps the processor dac from overriding the external dac?
Seems like it defeats the purpose of having an external DAC. Am I confused?? I'm sure there is a simple and obvious answer.