[lumzi23]

  Make sure that the O2 is on high gain.

I have tried regular gain and high gain. No dice. Even my PC 360 sounds off which I used be able to enjoy on the o2+odac now sounds wierd.

 

[abvolt]

I agree with everyone else a better dac/amp is a must for your he-500's. I also enjoy the he-500's and the best way I've used to burn in my gear is by simply listening to my music. Just my 2 cents hope you get things worked out,,

 

[lumzi23]

So just tried it again. They suddenly great. No idea what's going on.
 
Edit: Beginning to think I must have overtaxed the O2+ODAC during the burn in somehow.
 
Edit 2: Now they suddenly sound muffled and awful. I think it's the amp/dac at this point.

 

[lumzi23]

Okay so I finally figured it out.
 
Two things:
 
1: O2+ODAC seems to like 24bit/96khz best. It seems to sound best here.
 
2: I also learned that it is important never to go above 1 o'clock on the volume (potentiometer?) as that seems to introduce heavy distortion. I used to turn it up to 3 because the HE500 is very quiet on the O2+ODAC at low volumes (especially on some tracks).
 
Sounds almost perfect now. The wonderful tone I might have mentioned before is back. Only problem is that I threaded the headphone cables to death tightening and RE-TIGHTENING them to the headphones, trying to fix a non existent problem. So some instruments sound kinda rough/scratchy (plucking instruments, for instance). The headphone connectors themselves seem okay (sigh) so hopefully the new cables I just ordered will fix all lingering issues.