Sony 5400 Best Connection

If you want DSD or DSD 5.1, I think you need to use HDMI. I've tried both HDMI and XLR, and decided on HDMI. I really enjoy the DSD 5.1 available with many of my newer SACDs, where surround is used to enhance the sense of hall ambience.

As a side note you will get the benefit of DSD if you use the analog outputs but you'll only get 2 channel info. If you want 5.1 output you'll need to use the HDMI connection but then your preamp will obviously be required to accept the signal via HDMI although I understand there are products out there, which I know nothing about, that can convert the HDMI into analog (embedders?).

When I owened a 5400 I used the balanced output as the rest of my system was balanced but never even tried the single ended connections so I can't say which was "best" for me just my "default" connections.

Not sure what's the "best" connection as the "best" will be what's best for your buddy. XLR may not be "best" if the rest of his gear is not truly balanced - the inherent benefit of balanced connections is lost if the remaining chain of gear is not. I would offer that HDMI may be the least expensive way to hook the 2 pieces together...

I would think your friend would be better off listening to both and deciding for himself which he prefers. I can't imagine anyone not doing that irrespective of someone else's recommendation.