The ground loop isolator is the cheapest option, taking the noise out of the audio line. This noise usually comes from the power source and other items along the entire chain.
If you think of your power as a sine wave running down a horizontal axis, your components usually only care about the upper and lower peaks, they don't care whether the wave is centered on the axis or not. "Noise" however, is when that wave is off center. Further complicating things is that your components may wind up tugging this wave up and down (this is a simplified and not quite accurate view, but it will suffice). Making it worse is that you also have machine interference, which can distort that wave, but now we're getting ahead of ourselves.
A power/voltage isolator will clean up the noise at the power source, but it won't remove any inconsistencies further down the chain. It will try to bring that sine wave back to center before feeding it into your components.
A power conditioner actually tries to correct the sine wave itself, fixing inconsistencies since power rarely comes in at a perfect 120V/60Hz (for North America) from your wall.
A lot more confusion arises from the fact that this nomenclature is pretty haphazard and gets tossed around incorrectly (and just to cover my own butt, it's entirely possibly that I've got my definitions mixed up here too). From what I understand, a lot of "audiophile" grade power whatchamacallits all perform a combination power isolation and conditioning.
From your description, it sounded like you had a ground loop between your dac and speakers, and not between the dac and headphone amp. Trying to correct for ground loops is extremely irritating and oftentimes baffling. Sometimes plugging everything into the same power bar works, sometimes nothing seems to work. Sometimes it may be something unrelated in the room that's screwing it all up. Who knows.
A ground loop isolator is usually the easiest fix, since you're trying to fix it all at the final end. You have the cheap options like the radio shack RCA interconnect. There are the higher end pro audio solutions like DI boxes, but those are typically for balanced cabling (which I think will work with the AV40's actually).
Power isolators/conditioners/etc should work, but personally I have limited experience with them so I'd rather not give bad advice there. They are also typically much more expensive than the ground loop isolator/DI box method. Whether or not they work "better"... I can't say with any authority.
I've done some work in pro studios before, and even with all of the above in place we're still plagued by ground loops sometimes.
