Maximising sound quality from USB
USB to SPDIF is the way to go IMHO, even if the DAC has a USB input. The reason is that modern USB front ends have so much lower jitter and clock drift than CD transports, staple SPDIF receiver chips like the CS8416 respond very well to this, and are way less noisy inside the DAC than a USB input.
To get an in-DAC USB front end right is much more difficult, and introduces new EMI and noise issues. It is possible, look at some specialist units out there, mainstream ones are usually not good enough. They need to be absolutely isolated from the DAC unit, which means dedicated transformer windings, dedicated power supply (the USB +5V should not be used), and use of a signal transformer / optocouplers for galvanic isolation, not to mention excellent grounding and decoupling at RF frequencies.
Also, with USB, you do need to ensure that you are outputting bit perfect files. This generally means using WASAPI or ASIO, NOT using software volume in the OS, and ensuring that renderers and servers are not resampling files. Configuration is key!
Mana Acoustics Racks / Bright Star IsoNodes Decoupling >> Allo DigiOne Player >> Pedja Rogic's Audial Model S DAC + Pioneer PL-71 turntable / Vista Audio phono-1 mk II / Denon PCL-5 headshell / Reson Reca >> LFD DLS >> LFD PA2M (SE) >> Royd RR3s.