Help with correct signal path, please

At the moment I have a NAD C545BEE cd player feeding an Asus Xonar Essence STX sound card using analogue RCA phono cables. The Essence then feeds a Graham Slee Novo headphone amp which in turn passes on the line out signal to my active desk/subwoofer speakers. All analogue cables. This set up lets me listen to the cd player and web radio broadcasts very easily as everything goes through the Xonar and the Novo and on to the speakers.

Now I want to try a digital approach and have bought a DACMagic dac box and will use SPDIF coaxial cables. My question is what is the right order to chain these components up to get the best out of them? The Xonar card has a SPIDF out (PCM or 5.1, I'll use the PCM), the NAD has a SPDIF and Optical outs and the DACMagic has a load of connections including diigital in and out and an analogue phono out.

What should my signal path be?

Thanks for any help with this.

OK. I have tried STX>viaSPDIFCoax>DACMagic and in parallel CDP>viaSPDIF coax > to DACMagic, then DACMagic >via analogue RCA phono> GS Novo headphone amp>via analogue RCA phono > Active speakers (Razer Mako).

Bad news.

1 - the sound of both sources and particularly the CDP is glassy, a little more sibilant and harsh at the top end and generally confused. Choosing different DACMagic filters made no difference to the basic sound.

2. I was not able to record from the pc sources (internet radio etc) at all because despite a fun packed hour or two of experimenting with different Control Panel>Sound settings for Recording and Playback it was impossible to record from the SPDIF digital out of the Xonar STX.

So I have gone back to the way it was before with a DACMagic sitting doing nothing. Sound is more transparent again and warmer.

I just don't have the technical knowledge to understand what is going on.

Am I right that when I use the CDP's (NAD) digital SPDIF out I am effectively using the CDP as, and only as, a transport? If this is so, why was the sound inferior using the DACMagic as the DAC?

Similarly, when I use the Xonar STX's SPDIF digital out am I bypassing it's own DAC? I thought I was and that there again, the DACMagic would prove at least as effective if not superior.

I am quite ready to believe I am doing something simple wrong but I can't see what at the moment. I even avoided optical cables because I have read that coax gives a warmer SQ. In toto, the set up was pretty disappointing. I find it hard to see how the DAC in a £130 sound card can outperform my £260 DACMagic. There must be some pilot error in there.

Anyone have any ideas?

And to add insult to injury the Asus beta W7 drivers don't have any wave out at all so recording from the net (or anywhere else on my pc) is impossible. I have gone back to the Vista drivers which work with W7 (build 7100) fine and still have Wave Out.

Grateful for any light in my darkness.

Well, I gave it another go and reinstalled everything for digital use as before. This time the sound is markedly more transparent and clearer, and more mellow with little glassiness at the top end. I have no idea why - I used the same connections and cables as before. I did use the phase invert function a couple of times but I don't suppose that could have any effect over the overall sound of the system - both cds and internet radio. I wonder if I have accidentally found a better combination of settings in the sound card driver.

So that's good news and I'll live with this etup for a while and see if the DACMagic changes at all with use.

"In parallel" is my non-tecnical way of trying to say that I was using both digital inputs on the DACMagic.

Thanks for the help and advice.

Thanks. There's no way I am going to reformat my hard drive just for this! - if that is what you are suggesting. Perhaps you meant something else. If I felt it necessary I might uninstall and reinstall my sc driver but it's working ok now I think - it's just the combination of settings that are not straightforward. As I mentioned in one of my posts, my big concern now is that Asus have dropped the Wave Out in their W7 64 bit beta driver. This is crucial to listening to material on the internet.