I am looking to upgrade - looking for advice

...and remember to channel Joni in the midst of it all....

"....We're captive on the carousel of time
We can't return, we can only look
Behind, from where we came
And go round and round and round, in the circle game..."

...or, on the darker side of the street...from a Velvet, underground...;)

"I'm feeling good, you know I'm gonna work it on out
I'm feeling good, I'm feeling so fine
Until tomorrow, but that's just some other time"....

Audio is just another addiction....coffee, sugar, keyboards....*L*

I would improve your signal sources first before changing components. The Rotel/Parasound gear is competent and capable of revealing sound quality! Look for improvements in your analog and digital gear. At the receiving end the biggest improvement is always the speakers. Maybe you are tired of the B&W 705 S2 sound? All speakers are flawed devices! If budget allows you could move up to a more expensive pair of B&W’s with fewer flaws, like the 800 series.

You could get a new DAC like a Topping D30 and use the Yamaha CD player as a transport. The Project TT is an entry-level product. Even the Pioneer PLX 1000 ($699) is significantly better! Cartridge choice is quite important here, along with the phono stage. An easy recommendation is a Hana SL ($700) mc into a Schiit Mani 2 ($160) plugged into an aux input on the Rotel preamp.

There are a lot of ways to go here and budget and component matching are going to be extremely important. I agree with @jasonbourne71 ​​​​, your speakers may be your limiting step right now. B&W have a strong house sound and that sound, to me, is on the extremely revealing/bright side. Many B&W owners temper this by using a tubey sounding tube amp like a McIntosh. The biggest single contributed to how your system sounds is going to be good speakers. I might spend some time going around and listening to different speakers. Don't just listen for 5 minutes either, listen for as long as they'll let you. Speakers are like TVs at Best buy. They turn the brightness and contrast all the way up on those TVs to make them pop on the wall, but when you get them home you realize this hurts your eyes and adjust the settings. The brightest most detailed speakers will pop in the store but then when you return them home you may realize they are fatiguing. I say all this to say that make sure you have the right speakers before you go spending thousands on electronics that will never fix the problem. 

If you find you do like the speakers then what is your budget? I agree that changing your preamp would be the next step. There are lots of great units on the used market and that's where I'd look to get best bang for buck but first need to know how much you want to spend. 

Speakers are the most flawed devices. Yet offer the biggest improvement when changed. None of them sound exactly like  real instruments and voices! Not even the $200K Wilson Chronosonics. With speakers it is often what you can tolerate over time. We all hear differently and have preferences for different aspects of frequency response, timbre and dynamic range. So the marketplace provides such a variety of speakers - from small shoe boxes to towering monoliths!