What the benifit of using a separate dac?

1. To be independant of the transport (things break)
2. To play other formats
3. Connect computer (server)
4. Connect DVD and DTV (use cheap DVD player with jitter rejecting DAC)

DACs with jitter rejection (upsampling) are nice - they allow to use cheap transport and cable but some people prefare non-oversampling sound.

I have Benchmark connected directly to power amp (it has volume control) with one input connected to DVD player (coax) and the other to DTV (toslink). I plan to connect third input to my computer.

Benchmark is on neutral/revealing side (not warm) while more expensive Bel Canto DAC3 is a little more "organic" - check reviews of both on the web (stereophile.com)
Benchmark has 30 day free try-out program and Bel Canto might have as well. If you decide to get Benchmark buy new and the latest - possibly DAC1 USB ($300 more) since it has better XLR output drivers.

having just one purpose, without spinning motors and the associated power supplies for it, I'd have to go with a stand alone DAC as being able to provide improved performance levels.

But like one box CDPs, they too have their own flavors, options, and uses. The USB option for example may or may not be the best path for improved PC integration into a stereo system for example. Albeit, it’s a quicker remedy. Plug and play. I’ve since found that a very good sound card outputting a PCM digital signal via Coax rivals that path pretty easily too.

It can sure benefit or even fill out one’s rig as adding one to my system did. Especially if the DAC does an exemplary job in the de-jittering area. Lavry and Apogee are on the warm side of neutral IMO if that is the need. The Benchmark statements are already posted here. The Bel Canto DAC3 offers a lot of options and very good performance too. I chose the DAC3 as it fit my needs best.

Good points, Blindjim. There are a handful of DAC's that also convert USB directly to I2S (native language to the DAC) which circumvents the SPDIF interface (an additional conversion) in between. I think Empirical does a conversion to the Benchmark to accomplish this, as does the new Redwine Isabella in stock form, as well as others. Just instinctively keeping the signal down to as few conversions as possible would seem like a good thing. I'm not sure if this is similar to "asynchronous" USB conversion that is utilized by Wavelength in their recent versions of DACs, but I think these technologies are doing alot to address the de-jittering, as Jim put it, and computer>DAC connection and the clocking issues therein. Each manufacturer seems to be pursuing their own approach, and ultimately they all present a slightly different flavor. I was astounded in comparing DAC's recently, just how differently they can present music. The fact that so many love the Benchmark and I found it un-listenable (the highs were just too strident for me) just supports what I've always said - it is just as subjective as anything else in this hobby and you really just have to use your own ears and your own system/room/music to really make a judgment for yourself.

Jax2 - It depends when you listened to Benchmark. Early ones had Signetics/Philips NE5532 Op-amps that sounded thin. Around 2001/2002 Philips had factory fire (burned down) and stopped making them. Texas Instruments bought the license and designed new larger die that sounds better. Benchmark also needs a little time to get civilized but even after hundred hours doesn't sound warm (if that's what you're after).

Kijanki - I listened at length to two versions. One was an early version, but post-2002, which was thoroughly burned in. I listened in three very different systems to that one. The second was more recent and was a current, USB version which I ordered direct from Benchmark. Again, I listened in two different systems to that one. Since this was from the factory I had to burn it in myself. By the time I returned it I'd estimate I'd put around 200 hours or more on it by leaving it on whenever I could, so I don't know if it could have sounded better given more time. I don't know whether it came from the factory with any hours on it since they do have the return policy. The latter version was definitely an improvement over the former, but still suffered from stridency in the high end which ultimately made it difficult to listen to for long periods. I found it on the colder side, a sound I'd associate in some ways with SS amplification. OTOH, I heard it in several systems at RMAF and I very much like what I heard there, but I did not listen to any one at great length to determine whether any similar traits to what I heard at home existed in the long run. I have no doubts it can sound good to some folks - clearly it is praised by many - it just did not sound good to me, rather, in my systems in sounded clinical and a bit harsh. In comparison I much preferred an MHDT Paradisea which presented the same music with a much more natural presence. The early version I had I compared to a Wavelength Brick and a very old Muse Model 2+ both of which I preferred, the Muse being more similar to the Benchmark, but not nearly as harsh, while the Wavelength was a sharper contrast being a kinder gentler presentation. I believe all the DAC's I preferred were NOS DAC's if I'm not mistaken. I also tend to like DAC's and players with a tube output stage in general, though not as a rule. As with everything here, YMMV - to each their own.