There are two types of DACs: asynchronous upsampling jitter rejecting and non-upsampling (oversampling and non-oversampling). In first case (Dacs like Benchmark DAC1) transport doesn't matter (huge jitter rejection) and anything will do (I use server and cheap DVD player) as long as it has decent tracking and is "bit transparent". Digital cable doesn't matter either. In second case you need good transport with low jitter and good coax digital cable. I bought Benchmark DAC1 ($995) but other people prefer non-oversampling sound and are willing to spend more on transport and cable. It is matter of taste - I like Benchmark but to many people sound is too clean (analytical, sterile etc). Jitter is a noise in time domain and like every noise is affecting clarity.
Benchmark DAC1 has volume pot and I use it as a preamp (only digital sources) directly to power amp. It saves me money on pre and one set of interconnects. I also believe "less is more". If you need analog inputs Benchmark makes DAC1 PRE. Benchmark has 30 day evaluation program - try to get new one since early once had problems. It is neutral (not warm) sounding.
If you have decent transport there are many very good DACs within $500. If you willing to spend more then step above Benchmark would be Bel Canto DAC3 $2500.
Benchmark DAC1 has volume pot and I use it as a preamp (only digital sources) directly to power amp. It saves me money on pre and one set of interconnects. I also believe "less is more". If you need analog inputs Benchmark makes DAC1 PRE. Benchmark has 30 day evaluation program - try to get new one since early once had problems. It is neutral (not warm) sounding.
If you have decent transport there are many very good DACs within $500. If you willing to spend more then step above Benchmark would be Bel Canto DAC3 $2500.