Ronrags,
I also have a SB Touch and I'm looking into a DAC to pair with it, so your comments are of interest to me. You mentioned you were underwhelmed with Touch+W4S DAC1 and by Touch+Benchmark. Underwhelmed compared to Touch only?
Have you tried the Soundcheck Toolbox 3 on the Touch? I have and I'm happy, and suspect the improvements would be more noticeable with an external DAC.
BTW, if going down the optical route, make sure it's a glass and not plastic "cable". There was a thread on the cable forum a while back discussing this.