would I be better off...

I agree with Bomb. I would keep your amp and get an outboard DAC.
Please tell us more about your setup: computer, file types, playback software, speakers.

I'm still learning about all of it, and I'm sure I need a new laptop as my server. I have a decent amount of flac files and my mp3 are mostly 320kb. (Is that cd quality?) But honestly, I stream a lot of spotify for the convenience. My music is stored on a WD passport ultra 2tb external portable hard drive,(and backed up on a 1.5tb toshiba) and my computer is an old laptop used only for my stereo system, but it is an old slow PC Sony Vaio with windows XP. (I got it for free). Dvd/cd players were bought used. Lexicon rt10 and Technics 5 disc that both see no real use.
the lexicon is picky about even slightly scratched discs. Maybe the laser is going bad.They speakers will be upgraded soon. They are used Acoustic Energy Aegis 3 towers. My headphones are Phillips phidellio x1 and my software to play the digital files is?? (Windows media player is not really used). I use mostly Winamp? and VLC media player I believe. Help me please!!! Teach me. The salesmen at these stores just sell stuff, they don't seem to know squat about what PC to use or software of file types, etc. How do I learn? Thanks.

Realremo. You didn't list the PS digilink III. Are you not happy with yours or is it just outdated? I thought one of those was for sale on here as well.

The digital link iii is a good DAC, but with a bad USB implementation. I'm assuming you'll use USB to get the signal to the dac, not a spinner. I use a usb converter with my DLIII.
I'd recommend JRiver for music playback on your laptop. If you're going with an outboard dac, and keeping the laptop on your rack to keep the usb and coax cables short, you can run JRiver with a remote app on an iOS or Android device. It would be best to upgrade to Windows 7, if you can, not totally necessary tho.

I found the DL III to be a fine DAC and very worth the used price i see then go for here on AG. Yes the USB was included for convenience. I used a USB/SPDIF converter as well. Problem is that it only has a single coax input so makes it difficult to use a transport and computer via coax. I sometimes just like to play a CD, so I went for a DAC that had more inputs. I do like to use an external USB converter as i believe there are many high quality DACs available where the USB input is the weak link. That said, given your budget the suggestions by Realremo are sensible. I will add that I put together a Music Fidelity V-DAC and V-Link combo buying used here and E-bay for ~$160. There is a V-link for sale now here for $75. It would work well for CD quality files and streaming from Spotify. Would also allow flexibility in purchase of a used DAC.

I am not a PC user, got into the MAcs. I rip my CDs as AIFF which is equivalent to WAV for PC. I do know that for PC, JRiver is highly recommended.