I thought your DAC thing was a DAC cable, but it seems like not only cables can be DAC... Here is what I have:
http://www.headphonia.com/Accessory/USB-DAC-Cable-with-35mm-Mini-Plug-75cm-30::10134.html?XTCsid=2122881ef0898c9be4b8108c697a509e
I also have a little portable amp, the Arrow amp from the same brand. By pluging the DAC cable in a USB port, the sound bypasses the sound card (and speakers) and goes to my amp, which is plugged to my headphones. And it works, I can listen to music through it with Windows Media Player etc... only iTunes won't work. The sounds still goes through my speakers, nothing goes in the DAC cable. I don't get why, I guess it's a software issue but I can't solve it.
I tried the Quicktime manipulation you advocated:
I got it to work by going into QuickTime and having to select an audio device there...but then I selected playback options (ie .16 bit/96khz)...
music played back well enough for five minutes and then started to go bad...
Didn't work at all!