New Luxman DA-06 doesnt sound so great. Will it get better?

It appears that the step-down transformer you are using probably has a two-prong plug and outlet, while the Luxman has a three-prong IEC receptacle. While in most circumstances that might be sonically advantageous, as it would break any ground loops with interconnected components, I’m wondering if in this case it might be causing or contributing to the problem.

For instance if the Luxman provides galvanic isolation of whatever digital inputs you are using, the lack of an AC safety ground connection may result in its digital and D/A converter circuitry being essentially "floating" in an uncontrolled manner relative to the ground of the signal source, perhaps resulting in noise issues and consequently in jitter issues.

I’m just speculating, of course, but it might be worthwhile investing $35 plus shipping in a converter such as this one, which provides three-prong connectivity:

http://www.voltageconverters.com/itemdesc.asp?ic=VC500J

Good luck. Regards,
-- Al

I checked the voltage it is around 2.5V, varies a little bit because I am playing a cd.

As you appear to realize but others may not, 2.5 volts is the specified **maximum** output voltage of the DAC, that will only occur when the digital data corresponding to the instantaneous volume of the music is at its greatest possible value. Most of the time that voltage will be much lower, especially on recordings having wide dynamic range. And to be completely precise, that voltage is defined on the basis of the RMS (root mean square) value of a presumed sine wave, as opposed to the peak or peak-to-peak voltages of the waveform.

Also, John Atkinson’s measurements of the DA-06 indicate 2.36 volts, rather than the specified 2.5 volts:

www.stereophile.com/content/luxman-da-06-da-processor-measurements

Good luck. Regards,
-- Al