Kiwi, when you are doing the test, what mode does readout on the 3805 say it is in? It should say DOLBY DIGITAL.
When you say that you checked the connections, I assume that you are using a SINGLE cable out from the player. (Labeled digital out, or something to that effect) If you are only using the left & right audio out, you are NOT sending a digital signal to your 3805, and the test disc won't work properly.
Now to throw another wrench into the mix, since you are using a combo DVD / VCR, you will probably need BOTH the digital out AND the analog left/right out hooked up. You must tell the 3805 (through setup menus) that when you select the DVD input, that it only recognizes the digital input, NOT the analog.
Hopefully this helps more than confuses - it is late and I am tired.
P.S. - Connect the analog "L/R out" to the "VCR in" on the Denon - NOT "DVD in".
