Aurender and native DSD output

There’s no bug in your system. By the way Aurender customer service is great and you can reach out to them with this question. 

In case of N20, best results will be achieved using AES/EBU output because you are leveraging the Aurender OCXO clock.

If you’re streaming from Qobuz and or Tidal and that’s most of your listening, I would turn the Native DSD Off and completely disconnect and remove the USB cable. AES/EBU interface will sound superior to USB in your case. 

That is my point, the AES/EBU interface should not alter its behavior based on a setting that in theory only affects the USB interface. In my case, if I set the "Use native DSD on USB" to OFF, then I can play all sorts of DSD files using the AES/EBU interface, and if I turn the setting ON (Which in theory should not affect the AES interface) the opposite happens, I can play FLAC files, but no DSDs at all, not even DSD64.

This is likely because when you enable the native DSD signal that is what’s being sent to the AES/EBU as well and it cannot process that signal and so sends nothing or maybe it’s not even sent to AES/EBU at all — whatever, but when the native DSD is turned off the signal is “dumbed down” however it’s done which is why the AES/EBU connection can then handle it. What @audphile1 recommends makes total sense that if you’re not doing DSD use the AES/EBU connection as that is better for the reasons stated (OCXO clock) and when playing DSD use the native DSD signal through USB. Seems simple enough.

Aurender support will answer all your questions. The number is in the manual. Support via phone is excellent. Call them!

Even with USB out of the system and native dsd off, the N20 sends DoP via AES. Between the OCXO clock in the Aurender and the DAVE FPGA (Chord FPGA is really good with DSD), there’s zero need in keeping the USB connected. Not having it in there will probably result in better sound. 
To add, not all DSD albums sound better than their hi-res counterparts. I rarely dip into my DSD library. 

The aurender converts dsd files to pcm on all the spidf outputs.

If you turn native dsd on it will only play the files through usb