Thanks for the additional info… very helpful.
So, my first thought is… the speakers are likely to make a big difference. The better quality… the better. I would work on that first. The Kanta’s are likely to be great.
When I first started out in this, sometimes I would try to change multiple things at once to make sure I got a big boost in sound quality, to justify my investment. But, if you want to really get the most out of your purchases. It is better, to make one purchase at a time… let new equipment break in… speakers usually 100 hours or more. Then learn what your system sounds like, before taking on another step.
So, for now, I recommend getting the very best speakers you can afford. Now, for a more strategic look at HT and 2 channel.
I would skip the extra DAC for now. Typically, combining home theater and two channel audio is a huge compromise on the two channel side. If possible keeping them separate is best… clearly not possible for many people. Those who listen to music most of the time can use a Home Theater bypass to develop both. Here is one reference. But I would learn about how to combine the two and you can then get the best of both worlds.
Is you get great speakers, you can later enhance the music side. I have had a home theater and two channel audio for decades… and a little bit of surround sound really enhances HT… and a lot of better sound quality enhances two channel audio. Very different goals.