Imac to my dac- sounds awful?

Guys- be gentle, I'm a new Mac user. Got a new Imac 24 today with the 2.8 Ghz processor, 500 GB Hard drive. Beautiful to look at, so far I love the Leopard OS (I'm a lifetime Windows user ).

Imported some cd's into ITunes, and set it up per the advice on the Wavelength site- i.e. Import Apple lossless, set my preferences in sound to USB dac.

Plugged in my Glow Audio Amp1, which is new and has a built in 16 bit Dac and headphone output.

Sounds like crap- it sounded much better on my windows XP rig running ASIO 4All. I'm hearing some distortion and intermittent dropouts that occur at random.

I KNOW it's me- where can I get educated on how to address this?

Thanks much!

Any ideas where to steer me?