This may have been covered elsewhere, but I could not find it. Is it possible to use a SACD player and digital cables (of any variety), that will allow the Sennheiser to make the D/A conversion of the high resolution SACD layer or the same on a Bluray disk? Or do I have depend on the quality of the player for decoding, and use the analogue inputs? I am only aware of HDMI being the current option for external decoding. If that is case I might as well go for the HDVD 600 which is only analogue and save the money since I won't be using a computer for the majority of my listening.

SACDs aren't encoded like ordinary CDs and are protected by digital copyright, so generally no, it isn't possible. Some SACDs have a regular 2-channel CD layer where this may be possible, however. You're pretty much right that the best option is probably to get the 600 with the analogue section only. People buy the combined units for when they want one box only from their computer. An external DAC (or good SACD player) is almost always going to do a better job.