Why does my headphone set up sound better ?

Because the MF X-can and Senn 600 is a great set-up. First class. To acheive a proper room set-up you may have to consider how your room is arranged-speaker location, component location, wall treatments, and more. Listening through headphones eliminates all that, but you don't have any ambiance, unless it was recorded into the album. Be happy that your headphone rig is as good as it is.

I think you guys are answering the wrong question. I believe the question is, "Why does the headphone output of my CD player sound better than the CDP as transport > DAC > headphone amp?"

It's hard to say. I would venture that replacing the Philips unit with a real transport would help the DAC deliver a lot more of its potential. That's a half-a**ed stab at an answer from the equipment side. The other aspect to consider is the mental part. How are you comparing? A quick A/B switch is often not as effective as a more long-term comparo. Listen to a whole CD via the CDP, then listen to it again via the DAAC and HP amp. Your body should tell you which it enjoys more.

I had a similar experience with my first DAC/transport situation. I bought a Muse Model 2 DAC and at first listen, I could not tell the difference between it and the sound out of the $89 Denon carousel I had. After a month of listening to the DAC, going back to the Denon was painful. Give it some time, if you haven't already.

Dave, you are correct. I didn't understand the original question. In an A-B comparison, if the RCA output sounds better than the digital output->DAC, the fault may be in the DAC or the cabling. My systems always improved when I used a stand-alone DAC.

The Philips CD80 has a very good headphone output section. That, coupled with its now-classic 1541A DAC chipset, may account for the superior sound compared to your more complex hookup.

Thanks Davetherave,you are right, my question was related to the headphone output of the CD80 vs. the DAC and M-F X-CAN output to headphone . Should have been clearer about this. LOL, my room setup is far more realistic than the headphone sound from either output.
Nonetheless, I have AB'ed the CD80 headphone output vs.
the CD80 as transport to the EAD DAC to M-F X-Can at length.
There is less resolution from the DAC/CAN combo vs. the CD80 headphone output alone which is really surprising to me given the cost diff and of course the supposed superiority of the stand alone DAC and headphone amp. BTW, I am using Harmonic Tech Platinum digital connection between the transport and DAC and Cardas Hex Golden 5C interconnect between the DAC and the X-CAN. Could the extra cabling cause this?