What should I upgrade first on my budget system?

For a DAC I can recommend the Khadas Tone Pro 2 for around $249. Keep the Rotel in use as a transport. I have the less-costly Khadas KTB. Both are competitive with any DAC below $1K.

@jasonbourne52 Your mention of having DCM Time Windows and the Ohm made my day. I use to sell them way back when. Great speakers. The Time Windows blew my mind. Haven't heard them in too many years to count, but they would give many speakers today a run for their money. Thanks for the memory.

no you guys are all wrong, a great system is built around the source, without that nothing else matters.

@coryb 

If you own the place, I would think the least expensive and most durable upgrade you can tackle now is to run a dedicated power line to your system together with a whole house surge protector. The whole thing will cost you less than $500 (depending on location) and you would not have to do it again ever. You can read on the importance of a good power source elsewhere, but it will affect your entire system. Good luck in your journey. 

+1 spenav & +1 paradisecom