digital audio transfer from a DAT

[Telemachus]

I recently bought a terratec aureon sky which has a digital in and out using toslink connectors and i've been trying to record audio from a dat player using the optical cable, the link is recognised because my recording program (wavelab) picks up the source, but even when it's not playing anything I get massive noise levels on the monitor which totally obliterate any audio I try and record, I end up with a large wav file full of ear bleeding static.

I assume it's nothing to do with recording levels as digital audio transfer should e an exact copy of the DAT, any idea what's causing this,some kind of case interference maybe? Thanks a lot for anyhelp, i'm a bit lost at this point.