New CD player or DAC


I am interested in "upgrading" my digital signal. I listen to "rock" music on DAT & CD (about 50-50) Right now I have a Tascam DAT & listen to CD's on my Sony DVD player. I was wondering if I'm better off buying a DAC like the Link III for both digital sources or purchasing the Music Hall CD-25 or Cambridge D500 SE. As you can see my budget is about $500.00. I have been getting into more CD music so I may start to use the CD player more than the DAT, but I still need the DAT for my personal recordings. The rest of the system is DNA-1, CJ PV10AL & Vandersteen 2ce Sigs with junk cables. I'm also open to other suggestions for DAC's or CDP's & realize I need to upgrade my cables as soon as I figure out which ones to start with.
fishwater
For a budget of $500 I would look for a used Bel Canto DAC-1 and just use the Sony as a transport.

If you want brand new, then a Link DAC III is a better choice than getting the Music Hall or Cambridge, since you already have something to use as a transport. They are fine budget players, however the Link III is a definite step higher.
You could also pick up a used Link II (2) for around $175 to $200. If is the same in stock form as the Link III, it just cannot handle most of the add-on upgrade boards such as upsampling, etc.
Thanks for the reply. It is my understanding that the DVD or CDP is only used as a transport with a DAC if the coax is used, it will then by pass the adc & op amps in the DVD/CDP? So it really shouldn't matter what you use for a transport so long as it is a stable platter, good laser, etc, etc. Which was why my thought was to focus on a "decent" DAC & not worry about the "better" CDP. Is this correct or am I just hoping to save some pennies.
There are other issues; good digital and analog cables don't come cheap. There is also the likely need for a jitter reduction device like the Monarchy DIP, which you can buy used for under $100.00. However, you can get a really fine quality used 20 bit DAC like the Muse 2 for about $500.00, depending on options. I would also definately go for better cables as part of any upgrade. Likely to be nearly as important as a new DAC. You may want to consider used DH Labs ICs and speaker wire, or Audioquest. Also used Homegrown Audio should be available cheap.