RUNNING POWERED SPEAKERS FROM AN IMAC

The dragonfly most likely will provide better sound, but it also seems as though you have dirty or damaged headphone jack on the laptop. Cleaning could help, but it's also possible reasonably the noise you are hearing is from an intermittent connection at the headphone jack. Those little 1/8" jacks are easily damaged, especially if you've used the headphones much and stressed that connection by yanking, pulling, tripping over, whatever, the headphone cable.

Actually the headphone jack on the iMac has rarely if ever been used prior to this

try a pair of headphones connected in that jack. is there still static?

or, it may be a faulty headphone jack on the imac...

Well, just tried my Momentums in the headphone jack - clear as a bell. Put the RCA/3/5mm cable back in with the powered speakers and the static is back.....could it be that my lovely Radio Shack cable is faulty???

Yes, it could be. Sounds like you diagnosed the problem :) Still look into that dragonfly. For the $, it's a solid improvement