PSA suggested I approach the skipping as a PC problem, so I: upgraded the system in my MACbook, updated to latest Itunes, put in new memory (8GB), and replaced the external drive on which I store my music. I also did an activity search, to make sure other programs were not running and interfering.
This did not help, nor did swapping out USB cables, so I remained suspicious of the DAC, especially since the problem started when I installed the PWD MKII upgrade.
I therefore obtained another DAC (PSA DL III) and switched it into the system -- that appears to have resolved the problem.
I suspect it is something to do with the USB in to the DAC, since the problem did not occur when I connected a CDP transport via coax.
Curious if you have any further thoughts; I'll be in touch with PSA presently.