Earlier in my digital days I was sending CDs from my Oppo 105 to an LKS DAC using either spdif or optical. It seemed pretty easy so I don’t remember any particular settings. So I wonder whether the settings on your DAC are OK. In any event your set-up is not exploiting your DAC to anywhere near its full advantage.
My own next step was to rip my CDs to a small hard disk, and play using a small laptop and JRiver. JRiver recognized the Oppo with its spdif out on the network as a DLNA streaming device. IIRC it did play SACDs then as DoP files.
Next step was a real streamer and on and on.