Please explain transport limitations!

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First off thanks for accepting me into this forum. I'm in Australia, we're years behind you guys in the Northern hemisphere so please bear with me.

I have two music setups in my home. The best hi fi I get is from my Onkyo 7.2 system hooked up to KEF floorstanders, it's bi-amped using both the front and rear channels connected to separate binding posts. This way and in pure audio mode I get surprising SQ, the internal Burr-Brown dac has to be quality.

In another room I have a $100 Chinese media player connected via spdif to a separates Beresford Bushmaster dac. The RCA's run to a Cambridge Audio stereo amp and onto Cambridge bookshelf 'S' series speakers on stands.
The SQ playing flac files via USB sound just 'okay' rather than great. A step-down audio wise to my Onkyo setup. While I recognise there's 101 factors in play which can affect SQ like room configuration, I'm a tad suspicious about the mediaplayer. Amateur logic tells me that all digital sources are equal with SQ determined by the quality of the dac in the system. Recently, I've been reading that this isn't necessarily the case and the transport source is also important. What causes me to be suspicious about the media player is the way it has a volume control, which suggests to me the one's and nought's are being tampered with, even if it's only to alter the level of data flow to the dac.

Any ideas on this and can anyone explain why the transport is important when the dac is actually doing the conversion? If convinced that a more upmarket media player can improve SQ I'll upgrade. I know there are some on here who swear by wireless from their PC's as a transport but I reckon with the miniature high capacity thumbdrives around why would you bother having your PC on all day eating up the power? It's why I moved away from squeezebox in the first place.

Cheers!
 
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Digital volume control can degrade quality, by effectively reducing the bit width of the system. Each 6dB reduction in volume can lose you a bit of resolution. Keep the digital volume on maximum (assuming that this does not result in digital clipping).

The mechanical transport itself does not matter, provided it is good enough to deliver enough undamaged bits in enough time.

The quality of the crystal clock in the transport box can matter, as any low frequency jitter from this will be preserved right though to the DAC output. High frequency jitter is filtered away by the receiver chip in the DAC box. I think I read somewhere that some cheaper digital sources are now using ceramic resonators instead of quartz crystals. This, if true, is likely to lead to much worse jitter.
 
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