The Lab !2 can sometimes have trouble if a 24/48 or higher source is active on one Coax input and there is an active signal on the other Coax input.
I ended up putting my Vault in another room so it is longer an issue. Try the CD player alone with the Bluesound unplugged
It is a great sounding DAC, I didn't discover this until a few months into owning it and my dealer did not believe I was experiencing a problem.
To me it sounds so good I can live with it. I don't believe mine is broken, I think that the two Coax inputs are not isolated and it is confused as what to lock on,depending on what's connected and what the bit rate is
I have had 1.5 years of reliable great sound and I use it daily. I was pissed at first but their products are built well, sound great, and they are a small company so I gave them a pass on this one.
Also, does the CD player have a variable output that attenuates the volume in the digital domain? If so defeat or switch to fixed out They are rare but some players do this...