What, if any, component to upgrade? Advice?

When it comes to upgrade, it's hard to stop at just one item to replace. The first two suggestions are a good place to start. The Bifrost will set you back about $400 or so (if you forgo the USB) which would leave you with $600 to put towards a powered sub, perhaps?

All the best,
Nonoise

My suggestion, do not buy anything without trying it in your system first. So only consider upgrades that you can demo or that have loaner programs. You don't want to get "stuck" with an upgrade that really isn't an upgrade.
I also agree with Lloydelee21, a bit more power might help.

Simao - Let me throw you a curve ball . . . all your current gear will sound better with acoustical room treatments! Best darn upgrade you can make. It isn't a bright shiny new toy like an amp or whatever but it can be used to widen soundstage, attentuate bass modal peaks that muddy the mid's and highs, reduce annoying flutter echoes, and much more. Unless you are sitting very near field, what you're hearing is something akin to 50% equipment and 50% room effects. Taking the DIY route allows the most flexibility, cost savings and the option of over engineering it if you like to meet your room's unique requirements. Oh yah, buy yourself an acoustical measurement tool such as Dayton Audio OmniMic which is an essential tool! Goood luck.

Kevinzoe
I struggle with room treatment, because I was told to do it right will cost between 5 & 10K. Do you think room treatment will improve every room?

i would agree with the dac suggestions. i have spent the last few years adding better cables, better room treatments, better tweaks. i got some good results. but two weeks ago i replaced my music fidelity v-dac with a emotiva xda-1 because it had 6 inputs for flexibility and it changed my system from ok sounding to pretty remarkeable. i'll spare the flowery language but i now have a image that is 3 dimensional.