Best $200-$500 DAC

I think you can get a Musical Fidelity A3 24 used for slightly above your price range. I personally use a Bel Canto DAC2 from my soundcard with great results; you could get one off Audiogon for around $700. I think $200-$500 is a tough price range and that if you're willing to put in just $200 more the increase in quality of the DAC you'd be able to get would be substantial.

You could get a Scott Nixon USB DAC for under $500, and stream directly out of your computers USB port.

Also you could look at something like this:

http://www.positive-feedback.com/Issue24/firestone_spitfire.htm