When I had my denon avr, I had the XDA connected to the multi channel input section and front left and right. Then use the avr in stereo mode only. This stops any processing by the receiver whatsoever.
Man, I can't remember now what that light signified. But if you use the multi channel inputs, you have to select that input on your remote and no processing can be done on those inputs as Denon designed it I believe.