Very odd, indeed...taking into account that M-DAC is a great-sounding DAC with discrete Class A headamp in one nice package at very nice price.
The M-DAC alone is a bit underpowered for the HE-500, though I didn't try driving them using the XLR outputs. The built-in amp is rather good, slightly below the Lehmann Black Cube Linear in performance. If you power the M-DAC with a high powered headphone amp it should let the HE-500 shine a bit more. I found the M-DAC a bit too aggressive sounding and lacking in bass, but that was more than a year ago when I sold my M-DAC so my memory might be out of tune.