Outboard Dac's...Do they make a big difference?

I'd say yes, but with reservation. I don't know any of the three DACs mentioned. I've used PS Audio in the past with good results and I've heard Mac digital in other contexts and your description of it tending to smooth and sweet doesn't surprise me.

A good external DAC/clock combination (one box or two) can certainly improve on what you've got, but it depends on what you've got and what you're going to. If at all possible, try the proposed DAC in your system, using the Mac's Digital Out. There are much, much better DACs than the two listed.

Dave

I recently put a Benchmark DAC on my MC205, Love the upgrade

In my experience an outboard dac is one of the highest return upgrade investments you can make.

Trumpetbri - Some external DAC are jitter rejecting and allow to use cheap transport and cheap digital cable. Benchmark DAC1 or Bel Canto DAC3 are the examples.

I use Benchmark DAC1 connected to very cheap Sony DVD player and digital TV. I'm planning to connect my computer as well (music server). DVD players have very good tracking, play DVD and inherently play MP3. I'm also independent from the transport (easy and cheap to replace). Sound wise it doesn't matter what Benchmark is connected to as long as it is "bit transparent" (doesn't have digital volume control etc.)

Second advantage of this setting is that I drive power amp directly from Benchmark (it has volume control) using only one set of IC. I don't have analog sources but if you do - both Benchmark and Bel Canto make versions with analog inputs as well.

I don't know DAC Magic but I believe it is also jitter suppressing (there is a review in Stereophile on line).

It can't happen without a separate DAC on my system.