First, I don't have any idea on what your DAC may be doing, I'll leave that to more knowledgeable folks. But I KNOW via on screen display thru my receiver that the Touch does play back Hi-Res Files, everything registers correctly and even plays back some dts CD's that I have ripped perfectly, and if the Touch were doing the slightest thing it would mess up the dts stream. So unless you have transcoding on, you should be getting out what you put in. Now hopefully some more tech savy folks can help you out a bit more on what's going on with the DAC.
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