I have:

1. Old Altec Lansing ASC45.1 2.1 system (Sub plus 3" full range) Old but still sound better than most the $100-$150 speakers I've been able to listen to locally.  I'm assuming the Swans will be better.
2. Right out of the motherboard Realtek on board audio.

 
My options are
 

1. DAC or soundcard and Swan M10s
2. DAC or soundcard and Swan M20w (I know someone that has 2 sets new in the box)
3. Set of Swan M50w's

 
If options 1 or 2, what DAC?  I know nothing about them.
 
Music, not gaming. Everything from Yes, Elton John, and Rush, to Creed and Shinedown. I prefer acoustic versions when I can find them.
(if I understand correctly a DAC is really the only part of a soundcard I would be using to listen to music)
 
 

Speakers I've looked are everything:
Corsair Gaming Audio Series SP2500 High-Power 2.1 PC Speaker System (CA-SP211NA)
Creative GigaWorks T3 2.1 Multimedia Speaker System -
Bowers & Wilkins MM-1 Active Multimedia Speakers
Altec Lansing MX6021 2.1 Expressionist Ultra Speaker System (Black)
Antec Soundscience Rockus 2.1
Altec Lansing VS4621 Octane 7, 2.1 Computer Speaker
Bose Companion 5 multimedia speaker system - Graphite/Silver
Klipsch ProMedia 2.1 THX Certified Computer Speaker System (Black)
Logitech Speaker System Z623
Harman Kardon Soundsticks III
Audioengine A2 Black (Pr) 2-way Powered Speaker System
Audioengine A5+ Black (Pr.) Powered Bookshelf Speakers

Err best SQ for music get some proper bookshelf speakers with decently designed driver/tweeters? A cheap T-amp is all u need for near field listening

The problem is size.  I don't have room for anything that would have a even a 5" driver.  The biggest I could comfortably fit on my desk would be the Audioengine A2's or the Sats of the M50w's.  Not to mention I'd be under 3" from them.
 
Trog,  Just in case what would you recommend for a cheap T-amp?  Or DAC as well?

Honestly go with the Swan M50W's. You wont be disappointed. Now I ended up pairing my swan m50W's to a FIFO E7/E9 combo for about 180 bucks and it makes a HUGE difference. I dint know if this is out of your budget but well worth saving up for. (Especially if you have high impedance headphones). Right now just focus on getting good speakers, the M50W's are high quality and totally worth the money. I have heard from Paul over at Lock ware Systems that alto of Swan's recent M10's have been defective so I would stay away from those.

Well thanks for the info.  But I have already moved on from these options.
 
I ended up trying and returning both a pair of Swan D1010 IV's and AudioEngine A5's (not the +).  Both were a bit big for my setup, too much in my face.  And I didn't fine the D1010's to be finished quite the why I expected given the raves Swan has gotten.  Maybe the D1080's and M200MK's are better or maybe it's related to the same issue Paul has seen with the M10's.  The cabinets just seemed like veneer with already frayed edges on one corner.
 
What I have now is a set of AudioEngine A2's paired with a Nuforce W-1 Sub/bass extender.  The A2's are about the same size as the sats in the M10 and with the W-1 extender the system as the same power as the M50, though evenly split between extender and sats which is fine for me.  I got the A2's first and almost stayed with just them.  But the W-1 came up on sale for $99 so I went for it.  It makes a noticeable difference.  The relatively low power extender adds just that little bass note and feel that the A2's miss.
 
I have this connected to a Fiio D3 right out of the digital Coax.  I think all I really need now is better stands.  The A2's are sitting on some 3x3 candles instill in their wrappers.

Sorry to revive an old-ish thread but I too have a pair of Sawn m10's that I bought in March of 2011 and I have been running them straight out of my Macbook Pro (don't judge me)
 
I, too, am looking into purchasing a nice DAC that could work well with some Denon D2000's which I will be purchasing in the future. 
 
Audioengine D1 caught my eye and so too did the uDAC2 from Nuforce. Both are in the sub $200 which I would like for now. I wish I had enough money for the Nuforce ICON HDP or something else along those lines...
 
Any other suggestions? 

While I have moved on from the Swans here is an option for you
 
Musiland-Monitor-02-US-Dragon
 
Tamirci started a thread on it here:
 
http://www.head-fi.org/t/601674/musiland-monitor-02-us-vs-musiland-monitor-02-us-dragon
 
I now have AE A2's with a 10" Dayton sub being fed by a FiiO D3.  The Nuforce W-1 died in a week.

Thanks for the tip!
 
I will look into it. 
 
How you liking your A2's? I might get them as a gift for someone. 

I like them, but I was looking for nice small near field audio at reasonable levels.  I looked at others that would have been better if I wanted to crank it up.  Cambridge Soundworks Extreme, for example, were nice at 1/2 volume and up.  But the A2's sounded better at lower levels.
 
Had I found the D3 before I bought a my sound bar I probably would have bought a set for that as well.  It would have been cheaper.  My TV only had optical out as many seem to.