Budget CDP upgrade: DAC or new CDP?

This is really a difficult question. In your price range, you have many, many good options. Personally, I was not very impressed with the Musical Fidelity DAC, even though I LOVE my Tri-Vista SACD. If you shop around, you could probably get a Chord DAC 64 for close to your price. The Chord DAC is amazing even at retail. However, I think you should also consider a Modwright "Universal Truth" Pioneer DV-47 with the tube output stage. It is an amazing machine, and it will play all formats with aplomb. If you buy a new unit online and pay for the mods, you could still come in less than $1.5K. I won't even go into all of the reasons why some might prefer an outboard DAC versus a one box machine, but if you go for one box, you will at least save some money on cables.

Of course, one would expect a $1000 stand alone DAC to outperform a relatively one box player in most circumstances. The manufacturer doesn't have to pay for a transport, etc. From what you have stated, I think you might be focusing a little too much on specs. What you hear is really much more important than looking a jitter specs. Jitter is likely to be more of a concern with an outboard DAC and transport than it will be with a one box player. There are literally scads of players in the $1500 range, and I can't claim to have heard them all. Some possibilities to look into include the Linn Ikemi, Rega Jupiter, Classe CDP-10, Ayre CX-7 and the Sony SCD-XA777ES. All are very, very good and could be had in some form for less than $2000.