Hi Glynn - Too many questions ! but I'll try ...
First of all, if you remove your preamp, you, well, remove your preamp. And not put a passive one in place ! (not even a resistor).
Next, using the volume from XXHighEnd is a matter of getting used to. But, if your system is too slow it will disturb you.
It should respond within a second. Notice that if you try to give further commands without the previous being processed, things may go wrong, or work counteractive for speed. In normal circumstances this just works, but to keep in mind : when the command can be processed within a second. Thus for example, when this takes 5 seconds, it has become unworkable, and you wouldn't know what you're up to (didn't it work ? let's try it again -> thus now two commands are pending).
I have played with these things over the years and found myself happier with the increased dynamics I perceive as being a benefit of an active preamp.
How can an active preamp let increase dynamics ? it can't unless it's fake. So, let's keep that in mind !
Then, how can a passive preamp DEcrease dynamics ? haha, it sure can to begin with. But this is because your passive preamp will be a TVC, and a TVC is not linear (per frequency) and, well, I don't like the sound coming from it. It's a nice trick which doesn't work.
Here too : first learn how the sound IS by means of using NO preamp (remember, no = no haha), and next learn what your TVC or whatever means of preamp does to the sound.
The problem, of course, is that it is not said that all will match, and this starts at the DAC. If there's not enough drive, well, there it ends. Not really, because you can buy a buffer (this is a unity gain device which drives), but a good buffer too will cost you, and could be more than the DAC ($700-900 or so).
Next point is your 16 bit DAC. Indeed, that is not allowed to work with digital volume control. Maybe up to -18dB, but that's it. And, this usually is not sufficient as an operating range (but if your main amp is calibrated to produce "your" full sound level at full gain, it may).
Also to keep in mind (but I guess you pointed that out yourself) : with a 16 bit DAC the "legal" (say, losless) steps are 6dB. Way too rough !
In your opinion, would an upgrade improve my sound and also allow me to use the volume control of XXHighend or is it more important that the DAC be NOS?
Tough question, which I officially should not answer, because it is personal (some like NOS some like OS). But I think it can be answered to like this : If you like this DAC, you will like it (a.o.) for its NOS "capabilities". Thus, if you'd change to OS you sure won't be happy. The other way around is not the same, because most "OS people" just never tried NOS and they don't know (yet).
Either way : I would not buy another type (NOS vs OS) of DAC just because I told you to try without preamp. This should be approached differently :
Don't do it at all if it doesn't work in your setup (like with the 16 bits DAC) or turn it into a complete project of improvements. In your case this comes down to :
- A 24 bit DAC allowing for decent digital volume control
- A DAC which can drive interlinks for the necessary length
- A faster PC if the volume is quite inoperable at the moment
- Gain adjustment of your main amps, so the least as possible digital attenunation will occur
- Possible new main amps and speakers because now you hear everything.
So you see, from one comes the other. But notice this goes by itself once you hear the real music coming from your DAC (or how it interprets that anyway), if you can only trust me this is so. But if you sit back and think about what really happens ... there is no such thing as improving sound. Nothing does that. You can only destroy, and many things in the chain can do that. Eliminate them where you can, and keep realizing that you need some gain in the end ...
Peter