Joe, if the operation on analog inputs is entirely normal, I don't have any brilliancy to impart which would go beyond commenting that the DAC circuitry has developed a defect.
The warranty has expired, so it would seem that shipping it to a Denon service center wouldn't be the way to go if you have an independent audio service outfit there to check it.
Another idea is just to use it for analog sources such as FM and a CD player in a bedroom or other secondary setup. Then for just a few hundred dollars you could get a Denon or Onkyo factory refurb from Accessories4less which is more up to date than the 2308.
