DAC = thin sound

IMHO, the USB implementation on the DL III is not great. I had to buy a Vlink to get close to my Denon transport in sound quality when using my laptop as a transport. With the proper PC software I was able to best the Denon-DL III sound quality. All that said, my system still sounds really bright to my ears. Haven't solved it yet.
I am not able to hear a sound improvement between audio formats, I think this is dependant upon the system, but it is a cheap tweak to try. I also cannot hear a difference between glass toslink and digital coax, maybe it is my hearing!

audiophilleo, stello, anedio and maybe the offramp are all options for better USB-SPDIF converters, depending upon budget. I am still saving, don't know if I will get new speakers or keep dumping $$$ into the front end. At this point my front end is more expensive that my speakers are!

Richardfinegold, what other equipment are you mating your DL3s with? I am having some brightness issues in my room, I run a DL3 as well. Currently using a vlink with it, pushing lossless files through iTunes and Jplay.