Reading the two responses thus far, both sound a bit vague, but are essentially accurate. I think I can be more specific to your question:
1. Just because a CDP has Coaxial outputs DOES NOT necessarily mean you can use it as a transport with a DAC
2. Per the responses already posted it MUST have a coaxial DIGITAL output, presumably in ADDITION to the standard ANALOGUE coaxial outputs on most CDPs. It is the digital coaxial outputs that will feed the unprocessed digital signal to a DAC. If you fed the signal from the coaxial ANALOGUE outputs to a DAC you would not get anything out of the DAC since it cannot process an analogue signal.
3. According to various sites your NAD C520 DOES indeed have a digital coaxial output, so YES it definitely can be used as a transport for an expternal DAC.
Hope that helps.