Got one of these about a week ago specifically because it has coax output. I wanted a transport for my desktop rig at work (bifrost multibit, dx7s, jotunheim), and was getting annoyed at the stuttering playback via lightning to USB adapters on my iphone and ipod, So I went with the fiio, as it was the cheapest one I could see with digital output that could simultaneously charge. My Sony A17 player works really well to these DACs with the walkman->USB cable, no skipping or stuttering on any sampling rate, but you can't charge it while playing and playing music through that cable drains battery in less than 4 albums.
So far I like this X3 mkIII for this purpose. It does take a while to scan when I add new music, but I don't have to do that too often, and unlike the A17 and Pono, it doesn't force a full scan every time you reboot it. I updated to the 1.2.4 firmware before loading anything on it, so I can't comment on any earlier firmware. I've also only used it to drive headphones directly for a little while (a pair of beyerdynamic T5P), for those it obviously has plenty of power, and I enjoyed the sound quite a bit for the Tool, Pink Floyd, and Rush that I listened to.
Connecting it via coaxial to either the dx7s or bifrost was straightforward, and it does a good job at all the sampling rates I have (44, 48, 88, 96, and 192 are ones I've tested). There is a small delay <1s when switching sampling rates, but other than that no stuttering, etc. Gapless works with all the lossless files I've put on it. I haven't tried any AAC or MP3, so I can't comment on the small gap other people have reported there, but I can say I wouldn't be surprised if there were some gap with AAC. Apple players are so far the only ones where I've experienced flawless gapless playback on AAC
Navigation is decent, at least with the ~3000 or so songs I put on it. I do have a few CDs with 50-100 tracks and there's a noticeable delay when navigating to that album before the track list appears, so I guess that's down to the processing power. But since I'm generally putting on a whole album and listening to it rather than switching constantly, it's not a huge deal.