For me, there would be no question. I would use the DAC in the CD player. Also, just to note, I prefer stand alone CD players over seperate transports and dacs. Not everyone feels the same way. As far as MF goes, I feel that they are a little overrated. Also, I don't see you getting an A5 within your budget.
If you really keep up with sites like Audiogon and Ebay, you may get lucky and come across a good used Rotel 1072. Its an incredible player for the money. It will be less than $500, as well. While you are looking, a good used Arcam 23 or 33 would be another great find. I've owned both the Rotel and the Arcam 33 and would definitely buy either one again.
If you really keep up with sites like Audiogon and Ebay, you may get lucky and come across a good used Rotel 1072. Its an incredible player for the money. It will be less than $500, as well. While you are looking, a good used Arcam 23 or 33 would be another great find. I've owned both the Rotel and the Arcam 33 and would definitely buy either one again.