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I'm looking to upgrade my system and have a maximum budget of $2000USD. My current system consists of the following:
Source: Sony SCD-C555ES
Pre-Amp: Aragon 18MKII
Amp: 2X Emotiva UPA-1 monoblock amps
Speakers: NHT Classic 3
interconnects: Kimber PBJ
Speaker Cable: 1990 vintage Audioquest.

Been thinking about new speakers or a DAC. Benchmark DAC1 HDR or Dynaudio Excite X12. As a music lover, but noob when it comes to gear, I'm looking for advice. Thinking the Benchmark would be a great way to listen to high-rez files from HD Tracks, etc....

If the Kimber PBJ interconnects are older than a few years they've probably oxidized under the dielectric. Kimber specializes in this little trick. I'd borrow either new & similar interconnects or another brand and see what the system sounds like then before upgrading other components.
If no significant improvement can be heard with other interconnects, or if whatever was leaving you dissatisfied with your system remains I'd be look around at a new DAC but there's no need to spend anything like $2000 on one. Try to get the loan of Musical Fidelity V-DAC (don't know if this does high-rez though) to see what I'm on about.
Depending on what you'd get on eBay for your NHT's you could still have enough left over for new speakers. Hard to give advice though as we don't know how large your room is or how loud or how low you like to go with your music.

Magnepan 1.7s

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I'm looking to upgrade my system and have a maximum budget of $2000USD. My current system consists of the following:
Source: Sony SCD-C555ES
Pre-Amp: Aragon 18MKII
Amp: 2X Emotiva UPA-1 monoblock amps
Speakers: NHT Classic 3
interconnects: Kimber PBJ
Speaker Cable: 1990 vintage Audioquest.

Been thinking about new speakers or a DAC. Benchmark DAC1 HDR or Dynaudio Excite X12. As a music lover, but noob when it comes to gear, I'm looking for advice. Thinking the Benchmark would be a great way to listen to high-rez files from HD Tracks, etc....

If the Kimber PBJ interconnects are older than a few years they've probably oxidized under the dielectric. Kimber specializes in this little trick. I'd borrow either new & similar interconnects or another brand and see what the system sounds like then before upgrading other components.
If no significant improvement can be heard with other interconnects, or if whatever was leaving you dissatisfied with your system remains I'd be look around at a new DAC but there's no need to spend anything like $2000 on one. Try to get the loan of Musical Fidelity V-DAC (don't know if this does high-rez though) to see what I'm on about.
Depending on what you'd get on eBay for your NHT's you could still have enough left over for new speakers. Hard to give advice though as we don't know how large your room is or how loud or how low you like to go with your music.

I should have given more specifics about my system. The room my system is in is small, 12 x 16 ft with a 7ft ceiling. My musical taste is all over the spectrum, depending my mood. The characteristic of my system that I am trying to change is an electronic, mechanical quality to the sound especially in the upper frequencies. That's why I was thinking of the Benchmark DAC1 Pre HDR. My thoughts were that a new DAC might be a little more organic sounding than my 10 year old cd player. I would also be able to update my pre-amp which is getting up in years...

Jackfish's suggestion of Magnpaner speakers is a good one as they're a real high-end bargain BUT I'm not sure you'd be able to work them to best advantage in your room as they need to be at least 3ft, preferably more, out from the wall behind them. Maggies can also be fussy about the amplifier that runs them although there's no clear rule to tell you what will, or won't work, so you'd need to hear them on the end of your monoblocks before putting the money down. On the subject of DAC's my move would be to sell of my old player on eBay and buy a stand alone player without bothering with a DAC unless you want one that handles a range of different digital inputs and higher resolution digital formats.
So, I'd suggest first off investing in the best player you can afford, say one of Marantz's and later on, if you feel the need, upgrade your speakers. I'd still have a look at those Kimber interconnects, they can have turned black under the insulation without you noticing as the process is very gradual. Some people I've spoken to prefer the reduced treble output that oxidization seems to trigger but to my mind that's just plain silly. On the other hand if your system is at all savage in the treble you may find replacing the Kimbers reveals more than you want to know about.
You could also consider having your preamp refurbished if you know of a good tech you can trust.

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Jackfish's suggestion of Magnpaner speakers is a good one as they're a real high-end bargain BUT I'm not sure you'd be able to work them to best advantage in your room as they need to be at least 3ft, preferably more, out from the wall behind them. Maggies can also be fussy about the amplifier that runs them although there's no clear rule to tell you what will, or won't work, so you'd need to hear them on the end of your monoblocks before putting the money down. On the subject of DAC's my move would be to sell of my old player on eBay and buy a stand alone player without bothering with a DAC unless you want one that handles a range of different digital inputs and higher resolution digital formats.
So, I'd suggest first off investing in the best player you can afford, say one of Marantz's and later on, if you feel the need, upgrade your speakers. I'd still have a look at those Kimber interconnects, they can have turned black under the insulation without you noticing as the process is very gradual. Some people I've spoken to prefer the reduced treble output that oxidization seems to trigger but to my mind that's just plain silly. On the other hand if your system is at all savage in the treble you may find replacing the Kimbers reveals more than you want to know about.
You could also consider having your preamp refurbished if you know of a good tech you can trust.

Thank you for the lengthy reply, I have a lot to think about regarding my system! As luck would have it, I believe that I have the same exact amps as
Jackfish. I'll have to get some listening in on the Magnepans... I think I could make my room work..

With a room that small I'd get Magnepan MMGs for $600 and have "Peter Gunn" put them in Magnestands for $1,800. I have a dedicated 11'6"x15'9" room and my MMGs are almost 5 feet into the room ala Cardas and I'm sitting 7 feet from them. My room is also fully treated with GIK Acoustics. I also use Emotiva UPA-1 monoblocks with an Emotiva USP-1 preamp and Emotiva ERC-1 CD player. Best $1,700 system I've ever heard. Once I get the MMGs "Gunned" next Fall (or earlier if I move up in the queue) it will be the best $3,500 system I've ever heard.

If you are looking to eliminate an electronic, mechanical sound of your system perhaps a tube buffer would do the trick.
http://www.pacificvalve.us/YaqinTB.html
http://www.grantfidelity.com/site/B-283+Tube+Processor+Buffer
http://www.autocostruire.com/catalog/product_info.php?cPath=46&products_id=304

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I should have given more specifics about my system. The room my system is in is small, 12 x 16 ft with a 7ft ceiling. My musical taste is all over the spectrum, depending my mood. The characteristic of my system that I am trying to change is an electronic, mechanical quality to the sound especially in the upper frequencies. That's why I was thinking of the Benchmark DAC1 Pre HDR. My thoughts were that a new DAC might be a little more organic sounding than my 10 year old cd player. I would also be able to update my pre-amp which is getting up in years...

If I had your system, I would recommend the following...

A Dac magic (Under $500), and this thing to remove the "electronic, mechanical quality"

http://grantfidelity.com/site/Grant_Fidelity_B283_MKII_tube_processor_buffer

This $200 device will do more to fix that analitic overly digital sound then anything you can do for under $1000 and it only costs $200...

Then I would take the money you make selling your speakers and the rest of your planned money and buy those Maggie 1.7's...or the MMG's (I have a set in a small room set up about 18" from the wall...no problem at all but I have no experience with 1.7s)

In fact, If you want to really be smart..buy the Grant buffer above and try it in your existing system. If you do not like it, let me know and I'll give you $150 for it so what do you have to lose??

I suspect you will be surprised what those tubes can do.

I like JIMV's suggestion, though I've not heard it or your system which qualifies me as an expert in not knowing enough to offer useful advice. Plus, I'm biased toward tube gear because it just sounds like music.

Seriously, it seems like a worthwhile try. You're not out much and could easily sell it without much loss. Or, you could become addicted to tubes and lose your house and family. It's your call. Choose wisely.

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I like JIMV's suggestion, though I've not heard it or your system which qualifies me as an expert in not knowing enough to offer useful advice. Plus, I'm biased toward tube gear because it just sounds like music. Seriously, it seems like a worthwhile try. You're not out much and could easily sell it without much loss. Or, you could become addicted to tubes and lose your house and family. It's your call. Choose wisely.

Hopefully I won't get that into tubes..but I am open to the idea of them. I'm thinking of a two step approach at this point..first the Maggies...then the tube buffer.

The maggies will sound great BUT, they will do nothing about the electronic sound that was complained about..all they will do is let whatever problems there are in the system sound worse...

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The maggies will sound great BUT, they will do nothing about the electronic sound that was complained about..all they will do is let whatever problems there are in the system sound worse...

I think I could live with that for a while if the Maggies are as impressive as people are saying they are.

My local Maggie dealer doesn't allow customers to listen to gear before they buy it, so I've been thinking about going to Lyric HiFi's Lexington Ave store. Does anybody have experience with that store?

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My local Maggie dealer doesn't allow customers to listen to gear before they buy it, . . . . . . . . . . .

Could you please tell us who these idiots are so people can avoid them?

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My local Maggie dealer doesn't allow customers to listen to gear before they buy it, . . . . . . . . . . .

Could you please tell us who these idiots are so people can avoid them?

The local dealer I was talking about is Audio Classics in Vestal, NY

In my experience, the worst problem you have is that CD player (actually, it is probably the entire cause of your poor sound quality now).

Unfortunately, you can't improve the sound if it is not very good when it leaves the player, and that CD player is pretty poor. Garbage in ensures that the best amplifier and speakers will produce an accurate replica of GARBAGE...(garbage in...garbage out!!

I would spend $1500 on a really good SACD/CD player, the SONY SCD-XA5400ES, and then anything downstream is going to be getting some very very pure sound to start with. This player is in A+ in Recommmended Components, and competes with many units costing 3 to 6 times it price; it is a steal.

Your current player couldn't get a Class F rating; in my opinion it is 90% of your problem and adding a good DAC to it will not necessarily make a big improvement.

Actually, I see the 5400 selling for $1000-1200 online right now at various dealers, which is even better.

Don't spend money at the downstream end of the system until you have something good to send there. Buying better speakers now is the worst mistake you can make (trust me...I have been there and done that...lol).

You will certainly get a huge improvement in sound quality from this change (and changing speakers or amplifiers will not help at all until you take care of the poor source you now have).

Why do you believe using his existing player as a transport to a decent DAC would not work for a lot less money?

Larry Greenhill didn't find the Sony SCD-C555ES that so godawful bad nine years ago.

http://www.stereophile.com/hirezplayers/469/index.html

Sure we've come a long ways since, but improving the final piece (speakers) may not necessarily be all that bad. The NHT Classic Threes aren't going to get a Class A rating either.

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Why do you believe using his existing player as a transport to a decent DAC would not work for a lot less money?

That was my question also. IMO the only real downside to an external DAC is the inability to decode SACD's.

I haven't heard Maggie 1.7's. Two friends own 1.6's so I have heard them a lot. I've always thought very highly of them. The 1.7's are supposed to be better.

The first friend bought them after listening to them because of my recommendation. The second friend purchased his after hearing the first friends pair. The Maggies replaced Mordaunt Short and Polk speakers.

Thank you to everyone for your replies today. I am still in the research phase of upgrading my system. As for upgrading the source, I'm well aware of the "garbage in, garbage out" theory. I don't have that many SACDs and plan on exploring high-rez downloads at some point. On the other hand, I like the idea of giving the source the clearest window possible..ie the best speakers I can afford. Keep the advice coming

your room is more important than any of this.

it is a far more noticeable upgrade than any component, I promise you

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your room is more important than any of this.

it is a far more noticeable upgrade than any component, I promise you

Can't argue with that fact, but I'm looking to update/upgrade my system before taming my room.