I owned the Sony SCD-777ES player for a few years. My old Meridian 508.24 was slightly better at redbook play back. I also tried a bunch of DACs with the Sony, Electrocompaniet, Audio Logic, Benchmark, Musical Fidelity, Chord 64 and Birdland. For $1000 the Electrocompaniet was real nice. I thought the Audio Logic was better and the Chord 64 better then the stock tubed Audio Logic. Each of these DACs was an improvement over the stock Sony. You will also need a good digital cable like the AZ MC-2 or Audience for starters and then you'll have to move up from there. Another option is to have the Sony modified.
Happy Listening.
Happy Listening.