There is nothing wrong with newbie questions, as long as you really want to learn something
And before I start - it's impossible to ruin your system with linux deploy (probably you can, but you have to do it on purpose, and even then you will probably fail to do so)
Ok, now let's start
1)Run linux deploy, go into your profile and run menu-status. Look for the line "Support loop device", if it says "yes", then you can install linux into .img file, if no, you have to do it into directory (/data/linux/ will do fine)
2)About image size - with no GUI recommended minimum is 512mb, with GUI - 1024mb, maximum size on fat32 file system (which you probably have) is 4096mb. For our purpose 512 will do fine (I use the same)
3)go to settings in linux deploy, scroll down to "operating environment", tick "create symlink" and press "update env". It will ask for root permissions, grant it and wait for completion.
4)go to profile properties (once inside the profile - the button with arrow symbol on it)
distribution - debian,
suite - wheezy,
architecture - armhf (for newer phones, if you think that you phone is old and/or cheap one, it's safer to choose armel. It's about floating point calculations - software (armel), or hardware (armhf). Tegra 3 is doing fine with armhf, for others I can't say for sure. SoCs like S4 and similar should do fine, I think.)
Installation type - file (if you have loop device support), directory - if you don't
path - choose path for image file, or directory to install (/data/linux, as I already said, but be sure that you have enough free space on /data, at least 400+ mb)
Image size (if you're using image) - 512mb
Install GUI - uncheck
on startup group uncheck everything, except "SSH" and "custom mount" (you want access to your sdcard, right?
6) scroll to the very top, and press "Install"
8)after installation complete press start
9)download terminal emulator from market (run "su", and then "linuxdeploy shell" in it, now you're see your linux terminal), or use ssh client on your pc to control your linux (I prefer putty, i'ts nice and simple)
10)default root password should be "changeme", but for me it didn't work, so I had to change root pswd using terminal on the phone, and then connect from pc as root with new pswd.
11)after you connected as root to your linux you have to refresh you repos by running "apt-get update" command
12)install alsa-utils (apt-get alsa-utils) and mpd (apt-get mpd)
13)connect your DAC, run "aplay -l" and check, if alsa identified your card, also write down it's card number, subdevice and name (not the long one in "", but the short one before in capital letters)
14)run "sudo -e /etc/mpd.conf" (from your pc, 'cause from android it will be painful to use), and edit your mpd configuration file to send audio to your alsa device without alterations (you can read more here, but you need the part about mpd and alsa configuration only, ignore the rest). I've used bind_to_address "any", so I can connect from pc and from the phone itself to the mpd server, If you won't - you can bind it to "localhost".
15) download MPDroid from market, set server address in default connections as "localhost" (or 127.0.0.1) and you're good to go.
If you have any more questions - feel free to ask, but very basic ones (like "how to change root password" you can google yourself. From android terminal (using linuxdeploy shell) you're connected to linux as root anyway and can do anything you want)
And about wakelock - no, it wont eat your battery, as any music player enables it by default. MPDroid is not a player, it's a client, thus it doesn't use wakelock. That's why you have to turn it on manually.
Wow thats some steps, thanks man, 'll do today. Its always good to know people out there trying to develop sonething that's not perfect before.
Thanks for your help buddy. I 'll report back.