[DanoRoo]

I stream audio files from my computer to the hifi in my living room via a WDTV Live Plus.  Apparently the WDTV Live will only output audio at 16bit/44.1khz.  If I route the digital audio from the S/PDIF output of the WDTV Live to a more "audio friendly"  DAC (Cambridge Audio DacMagic), do you guys think I'll hear an improvement?  The sound quality currently isn't bad.  It just isn't audiophile quality.

 

[Iniamyen]

Well you won't get a higher resolution signal, if the WDTV's limit is 16/44. I wasn't sure if you knew this, as it's not really relevant to your question.
 
If the sound is lacking in terms of hiss or other audible artifacts, then yes, an outboard DAC would likely be a noticeable improvement. I wouldn't invest in a DAC unless I heard something that I knew could be improved though. IMHO.

 

[DanoRoo]

Quote:

Well you won't get a higher resolution signal, if the WDTV's limit is 16/44. I wasn't sure if you knew this, as it's not really relevant to your question.
 
If the sound is lacking in terms of hiss or other audible artifacts, then yes, an outboard DAC would likely be a noticeable improvement. I wouldn't invest in a DAC unless I heard something that I knew could be improved though. IMHO.

Thanks for the reply Iniamyen.  I think the 16/44 is the ANALOG output of the WDTV Live.  I was thinking that the DIGITAL output coming from the S/PDIF would be the native resolution of the source file?  Aren't the digital outputs basically a "signal pass through", or is that not always the case?  

 

[Roseval]

It is a matter of the hardware used.
Cheap sound cards are often limited to 48 kHz only
Toslink is according to the standard limited to 24/96
 
It is also a matter of the software. On a PC you can apply digital volume control, bass enhancements, etc all over the SPDIF.
On a PC you can play 24/192 over Toslink simple because the software down samples it to 24/96
Etc.
If you want to know for sure, check the specs of the WDTV.
 
Back to your question.
If the DAC e.g. the Cambridge is better than the DAC inside the “HiFI” you might hear an improvement.
But DACs inside modern receivers are often pretty good.
The only thing you can do is try.