More money toward better speakers or a better DAC?

I believe most would agree with you that the Bluesound Node does 'confines' the music and that it is the weak link in your system. Many have posted here that they use it with an outboard DAC. 

Can’t believe how awful bluesound dac is.  Outboard streamer for now is my path.  BS dac is dreadful.  See so many using it in their high end systems, also horrifying.

Generally, speakers will always have the greatest impact.

Still, it "depends" on the room and the level of the overall system . . . i.e. the weakest link.
 

I had an EAR Acute 2006 CD player and Legacy 1995 Focus speakers.  This year I upgraded to a COS Engineering DAC2+ ($5k) and intend to upgrade my speakers to a Von Schweikert VR9 MKII ($35K).  In this case, I think the speakers will make a bigger difference than the DAC but the DAC was more affordable change for now.  Your B&Ws with adequate power should be good while you should upgrade your DAC with a $1-$2K price.  My DAC would make a huge improvement but then you could start thinking about buying a better quality used pair of speakers.  I buy digital components new (they change for the better so quickly now) and used speakers (high end quality available at big discounts in just a model away from the latest ones).