DAC or new CD?

I'm assuming your NAD has a digital out. I would recommend an MSB link DAC ($349), a Monarchy DIP jitter reducer ($200)and a Canare Digiflex Gold digital cable purchased from Charlie Sprague (about $35). That will set you back about $600 and it will sound better than what you will get out of an Arcam. I did this to an 8 year old Sony carousel w/ a TosLink optical connection and was astounded at the improvement. I bought a brand new Philips CD recorder for my wife. It had a coax digital out and the improvement was even greater than the Sony. This is a low risk proposition: you can order the Link from MSBs web site (www.msbtech.com) and return it for a full refund in 30 days if you don't like it. Same deal if you get the Monarchy DIP from AudioAdvisor (www.audioadvisor.com). You could probably borrow a cable from someone or just use an analog cable to see if it works for you, but I believe you'll want to keep this stuff once you have. The items that give the greatest sonic benefit are, in order: the Link DAC the DIP the cable The improvement you'll hear is not subtle - it's like changing from mass market to high-end speakers, and its greater than changing amps (I know, I just bought $8k worth of Bryston amps and my wife is upset that it didn't make as big of an improvement as the Link). The LInk is a great little box. My wife and non-audiophile friends immediately commented on how much better the system sounded - with no A/B comparison! My wife doesn't hear the improvement from the DIP, but I do and you probably will. However, if your budget is tight, you can always add it later - the Link does a pretty good job on its own, and you'll probably want to spend a few weeks listening to it so that you'll be better able to judge the impact of the DIP and whether it's worth the extra $200 to you. Enjoy!