Modify my scd ce775 or buy external DAC?

I can't say what the specific benefits of modding the unit would be. If it elevates its performance up to a SCD-555es level, might be worth it. However, before you do anything, suggest you try a "forgiving" interconnect such as MIT if you have not done so already. I have tried an MSB link dac and it is not where I would go if I wanted relief from digital fatigue. The smoothest dac at a cheap price that I have heard is the Micromega. Needs a good transport and cables to sound its best. The Sony you have only has toslink out, so you would need a jitter reduction device to connect by coaxial cable to Micromega.

I think the stock player would benefit from some used MIT 330 cables, which can be had used for around $50 or so. Terminator 2 is ok too. The Micromega dac was Class C in Stereophile's Recommend Components in 1996. Was made in France but is no longer in business (at least in US).