Assuming you were running analog-in to the M1, the signal path was:
original analog signal > M1 converts to 16-bit / 32 kHz digital > M1 converts to back analog > MT then re-converts to digital whatever at whatever bit-depth and sample ret is set on the MT
In this case, any level changes made on the M1 were passed through to the MT. The analog-out on the M1 is not a "pure out", i.e. a passthrough of the analog data sent to the M1 - it's first converted to digital, and then back to analog before output.