Hmmm... I can't say I totally understand what you've done... but here's what I would do
1) Connect DAVS550 to your TV with an S-Video to scart lead. Both AV1, and AV2 will accept an S-video signal on the FQ sets IIRC.
2) Get a bog standard interconnect (or whatever you choose to use!), and connect it between the phono OUTPUTS on the back of your TV, to the phono INPUTS of either video 1, or video 2 on the DAV
Bob's yer Uncle!

When watching a DVD just select the relevant AV channel on your TV and crank up the DAV, and when you want to have TV sound via your speakers, then select either video 1, or 2 (whatever you choose to use) and whatever source you're watching (Sky/VCR/Terrestrial) will playback in glorious PLII
K.