The internal structure and formation of early-type galaxies: the gravitational--lens system MG2016+112 at z=1.004

[Abridged] We combine our measurements of the velocity dispersion and the surface brightness profile of the lens galaxy D in the system MG2016+112 (z=1.004) with constraints from gravitational lensing to study its internal mass distribution. We find that: (i) dark matter accounts for >50% of the total mass within the Einstein radius (99% CL), excluding at the 8-sigma level that mass follows light inside the Einstein radius with a constant mass-to-light ratio (M/L). (ii) the total mass distribution inside the Einstein radius is well-described by a density profile ~r^-gamma' with an effective slope gamma'=2.0+-0.1+-0.1, including random and systematic uncertainties. (iii) The offset of galaxy D from the local Fundamental Plane independently constrains the stellar M/L, and matches the range derived from our models, leading to a more stringent lower limit of >60% on the fraction of dark matter within the Einstein radius (99%CL). Under the assumption of adiabatic contraction, the inner slope of the dark matter halo before the baryons collapsed is gamma_i<1.4 (68 CL), marginally consistent with the highest-resolution cold dark matter simulations that indicate gamma_i~1.5. This might indicate that either adiabatic contraction is a poor description of E/S0 formation or that additional processes play a role as well. Indeed, the apparently isothermal density distribution inside the Einstein radius, is not a natural outcome of adiabatic contraction models, where it appears to be a mere coincidence. By contrast, we argue that isothermality might be the result of a stronger coupling between luminous and dark-matter, possibly the result of (incomplete) violent relaxation processes. Hence, we conclude that galaxy D appears already relaxed 8 Gyr ago.