Do I need a Dac?

kabila yes if you add a dac you would connect it to an XLR or RCA analog input not digital. But looking at the list of Dacs you have there and the specs on the Dac in the Halo it looks like a lateral move at best and possibly a sonic downgrade. Do you like the sound your currently getting? If not perhaps you should look at something else, check speaker positioning and maybe upgrade your cables?

I've heard your Halo plenty as it gets plenty of play time at our local Parasound and Cambridge dealer. I have not heard the Cambridge 851D but I do own the 851C and that is a great player and I believe they are very similar. I can say that at the store they have a 851C running analog into the Halo as they and I have as well have  spent time going back and forth and the Cambridge 851C is clearly better than running through the Halo DAC. Same is true with its internal phono section; a modest Pro-Ject which they carry as well or the Cambridge 651P does better. The Halo is a very fine integrated that does a ton for its price and even if it was just a straight integrated it would still compete well; that they include what they have for the price is a huge bonus. The DAC isn't bad but I know the Cambridge is better. Can't speak for the other DACs on your list. You can't just compare chipsets as there's much more to it than that, such as circuit design, parts, power supply's and etc. if you can drag anyone of these DACs home give it a try first. The store also uses the DAC in the 851C from their music server instead of the DAC in the Halo... it's really not that close in comparison. Again I can't speak directly on the 851D, but am referring to the 851C.

Yes the Cambridge and your Halo does sound better with balanced ICs. The Cambridge and your Halo also will benefit with a power cord upgrade over the stock one as well. If you haven't upgraded your power cord on your Halo I would start there first because you really haven't heard how nice of an integrated it is yet. If you like Kimber, they make very nice PCs for the money and there's usually a few on this site used. I use a Kimber PK10 Gold on my 851C which is a fine PC that works great on my Cambridge.

Definitely agree with jond on look at your cables maybe first. You already have nice equipment and if you did upgrade to a DAC, with your current cables you might not hear much of a difference. I used to own and use Kimber 4TC and used to think it was a great cable for the money but other companies have popped up over the years and now you can find better. I went from the 4TC to Clear Day Double Shotgun and the difference is huge. The Clear Days are so much cleaner, open and transparent; the Kimber’s sound flat and dead by comparison. Clear Day ICs are very good too and I own both single and balanced. I’ve recently upgraded to WyWires but still highly recommend the Clear Days for the money. As always try to audition cables or work with a vendor that will let you return them if they don’t work for you.