I called and asked Wadia the same question about a year ago (i have the 170i), they told me that the iPod does all the processes (EQ, volume etc) in its digital domain before the digital signal goes through its internal DAC. The Wadia takes the iPod's digital signal out right before it enters the internal dac, that is why the digital signal is effected by EQ setting. They suggest leaving the EQ setting in OFF position
Wadia 171i iPod Dock having too much Base?
I found something interesting you may be able to have some fun with if you own an iPod and Wadia iTransport. It seems that though Wadia bypasses the analog output of your iPod, it does not make it passed the iPods built-in EQ! For the last six months I was bothered that my Wadia was producing too much base, then while playing with my iPod settings I found I had base boost turned on, when I turned off the EQ, presto! I tried a couple of other EQ's and found that selecting "Flat" sounded better to me anyway than just turning the EQ off. I never knew about this, just stumbled on it. Check your iPod, try turning off EQ and try some of the others EQ's available, there's a ton of them, again, Flat was my favorite and finding this has transformed this part of my system.
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