where next to go?

I tried for quite some time to get digital that rivals vinyl. I could never do it using PC audio playing software. I finally bought a Sonos system and now stream lossless (FLAC) encoded files from a PC. I run the Sonos direct into Audio Note monoblocks with a full horn system.
I have tried many DACS in the 1 to 2k price range, being fed by the Sonos, but in the end, the Sonos direct has the most natural and organic sound, that I ended up keeping it and selling the DACS. Its almost embarrassing that the Sonos beat out the rest of the DAC's, but it really is that good.

David - the most important thing in ANY digital audio system is the master clock(s), whether it is Squeezebox, CD transport or USB interface, even more important than the DAC design. If you are ever to eliminate this grainy, raspy sound, you will need a better master clock. Just buying another DAC will probably not cut it. The DAC you have is probably fine if it is driven from a low-jitter source.

It is possible to get analog sound from digital:
http://www.stereophile.com/content/empirical-audio

Steve N.
Empirical Audio

David, both your USB converter and DAC are not cream of the crop. You should either upgrade your USB converter (which will provide the all important clock to the DAC), or get a stellar asynchronous USB DAC.I would personally go the USB Dac route. Some of the top contenders are (bit there are many more):

Wyred4 sound DAC2
Ayre DB9
PS audio Perfectwave MKII (MKI need not apply for USB source)
Emprical Audio overdrive

David, I second your thought on the vocals reproduced by the DLIII-- its NOT that good. To be fair, I only have the DLIII for a week so its not really conclusive.. I decided to go ADD a transport feeding via coax, we'll see what happens.. My impression with USB input-- NOT that good, with TOSLINK- I think it favors more on highs leaving the midrange lean sounding..

Steve, I thought DAC's suppose to clean out jitter or re-clocks them? CAn you please elaborate.. Sorry I'm a newbie.

Thanks in advance

jason

Jason, here is how it works. The vast majority of DACs operate in sychronous mode on all inputs except for USB. This means the source/transport provides the masterclock, and makes sound quality highly sensitive to the quality of this clock.

There are some exceptions to this, in which the DAC buffers and reclocks ALL inputs (asynchronous DACs), most notably the PS audio perfectwave MKII in native X mode.

Since computers provide very crappy clocks, USB converters and most USB DACs are asynchronous, meaning the DAC / converter buffers and reclocks the signal.

What does this mean? Since you're only concerned with computer audio you can do two things:
1 - Get a USB converter that provides a very low jitter clock to your DLink III. You can spend between say $500 for a good (e.g. JKSPDIF Mk III ($460), to $3500 (offramp 5 + Turboclock + power supply) for a SOTA USB converter, or any amount in between (Audiophilleo 2 with Pure Power ($999), Wavelength Audio WaveLink ($900), Offramp 5 base model ($1200))

2 - Alternatively, you can get a very good USB DAC, which really is the asynchronous USB converter and DAC in one box. I listed a few options in my previous post, but these DAC run between say $1,500 for the Wyred4Sound to $4000 for the PS audio Perfectwave and Empirical Audio overdrive. The Ayre is somewhere in between.

Again, in my estimation the USB dac route is more cost effective has fewer boxes, and I suspect will give you better results than keeping the DLink III.

You can easily rotate a few USB converters through your system, since most manufacturers offer 30 day trial. If this solves your problem for $1000 or less, you could keep the Dlink III. If not, move up the food chain with a better USB DAC (some of which probably can also be had on 30 day trial).