I say put the Cambridge Audio DacMagic along with the Pangea P100 Power supply on your list. I enjoy this combo quite a bit and it is well within your budget.
Another DAC that I've read good things about in the sub $600 range used on A'gon is the PS Audio Digital Link III DAC.
Another DAC that I've read good things about in the sub $600 range used on A'gon is the PS Audio Digital Link III DAC.