It's a gigabyte z97 gaming 7 motherboard. My audio setup will mainly be for music but I do a little bit of gaming and Netflix. I would probably prefer the USB dac over the sound card. Would you say the Schiit Magni would be better than the FiiO E11K or would I not notice a difference?
Your motherboard comes with fairly good on-board audio (for it being on-board audio), so the HE-400 will do decently well plugged into it.
The Z97 Gamer 7 comes with a ported SBX software (SBX headphone surround sound), software that was originally for the Creative SoundCore3D audio processor, but then ported over to the Realtek ALC1150 audio processor.
Is the porting to the ALC1150 as good as running off the SoundCore3D, not something I can answer.
The Xonar DX (or Hifimediy DAC) and E11K are the lowest costing but still decent DAC/amp setup.
If cash is not an issue, spending a little more for a Schiit Modi/Magni stack ($200 to $300 + tax + shipping) might be worth it.
Get an optical input Modi DAC and connect it to the motherboard's optical port, this way you can use all the features of the built in audio (like SBX).
I'm a fan for Audio-GD and use an 18 month old Audio-GD NFB-15.32 DAC/amp, $270 + $45 shipping
Dual WM8741 DAC chips.
USB, optical & coaxial inputs
http://www.audio-gd.com/Pro/Headphoneamp/NFB1532/NFB15.32EN.htm