Accept free Audiophilleo 1 and upgrade DAC?


First post!...and unfortunately, it's painfully similar to a string of Sangbro's recent threads, but I'm looking for guidance with a specific situation.

Two questions, but first, here's the digital part of my system. Microsoft Surface (running Roon as core and end point) > AudioQuest Dragonfly Red > Rogue Audio Sphinx v3 > Zu Audio Omen Mk 1. 

Question 1: A friend recently gave me an Audiophilleo 1 (w/ Pure Power) USB to S/PIDF converter. Given what I've read on this forum and my current system, it seems like a standalone DAC upgrade should be prioritized first rather than looking for a streaming DAC if I have $1,000 to spend. So, I'm leaning towards inserting the Audiophilleo and then finding a new DAC instead of getting a dedicated streaming DAC (e.g., Bluesound Node 2i, Cambridge CXN, Pro-Ject Stream Box). Is this what you would do if you had my system?

Question 2: What recommendations do you have for a new or used DAC for $< 1,000? It seems like a Denafrips Ares II gets good reviews. I don't really have a grasp of what "used" DACs I might keep a look out for that dips into my price range.

Thanks,
nickamland
I once ran the Audiophilleo w PP into a Bryston BDA-1. The BDA-1 is a very good DAC and can be found used for ~$700. 

That is the advantage to having the USB/SPDIF converter. You can look for an older DAC( from around 2010) which are great with exception of their USB inputs.  
I just bought a MHDT Stockholm v2 from a guy who used it with the Audiophilleo 1 (w/ Pure Power) USB and loved it, said it made a big difference with USB. The Stockholm is a very musical and detailed DAC which seem to bump up the bass in my tube based system. We are streaming all day long ( still working from home) and. never tired of the sound. I would have bought the Audiophilleo 1 but didn’t need the USB input and of course the extra $$$
Check them out lots of users-google
https://www.lineartubeaudio.com/products/mhdt-labs-dacs?gclid=Cj0KCQiAlZH_BRCgARIsAAZHSBm4xo9rHSGsya...
The MHDT DACs are good buys. The Audiophilleo is a great USB/Spdif converter. Pure Power makes an improvement. 
Thanks for the suggestion. I didn't mention above that I'd probably be looking for an MQA-capable DAC because I stream from Tidal often. Should I reconsider? I don't think MHDT is. 
Think about just getting a Schiit Modius dac. It’s only 200, but really good. With a 15 day return policy there is less risk. I’m not making a joke here. The new Unisom usb input card is terrific.
Oh sorry, after posting, I read your post about wanting MQA. The Modius does not do that or DSD.