Advice on outboard DAC using DVD as transport

I have a Sony DVP-NS900v dvd/cd/sacd player.

SUMMARY: Good video, acceptable SACD playback, not great CD playback.

I was thinking, buy an outboard DAC, use the optical out to the DAC for CD playback, use the coaxial out to the pre/pro for DTS/Dolby Digital. Or vice versa.

Any thoughts or specific DAC models to look at?

I am budget restricted to about 300 or 400 hundred.

Thanks in advance.