I looked at these a while back. What I can remember is below:
The 163 has a tuner, a microphone jack, and front inputs. The 1068 has none of these. Some would say an integrated tuner and a microphone jack can both degrade signal quality, but probably nothing I would notice. The 163 also has one extra digital coax input, I think.
The 1068 does upconversion to component video, and can display its OSD in the component outs. The 163 can't do this. The 1068 also allows adjustment of timing for lip-sync matching which can help with some cable channels and some slow screens.
The 1068 has a much more complete and easy to understand manual. It also allows more custom settings per input then the 163 and allows you to set distance per speaker, not per speaker group (left rear surround as opposed to rear surrounds). It also allows you to set the crossover per speaker which the 163 does not let you do.
However, the 163 has global presets which are quite powerful.
Again, this is off the top of my head. You would want to verify this with their online manuals.
I have also compared the sound of the NAD T773 w/ the Rotel RSP-1068 driving the T773 (so the receiver was being used as just an amp). This was with the same speakers and room. This is as close as I've gotten to a comparison of the sound of the 163 and the 1068.
I would say with the 163 hooked to the 773 the sound was excellent and *maybe* slightly cleaner than the 773 on its own, though that would be expected with the separation of the pre-amp stage. I also felt that the sound from the 1068 was perhaps not quite as lively or warm. But I only had an hour to do the comparison so it is very hard to say.
Anyone else have comments on the sound of the Rotel RSP-1068 pre-amp vs. the NAD T163 pre-amp?