Tonight I subjectively tested playing CD audio on a new but cheap DVD player connected to the E50 via both toslink and spdif. I compared the sound to a FLAC rip of the same CD that was streamed via the USB input on the E50. I noticed that the sound from the toslink input was noticeably worse than both the spdif and USB. The higher frequencies in cymbals and in sibilance was noticeably more distorted and uncomfortable to listen to. Meanwhile, during this limited testing, I couldn't tell an obvious difference between the same audio played via either the USB and spdif inputs.
In Amir's tests of the E50 the jitter on both the toslink and spdif inputs appear to be similar and below the threshold of human hearing:
I was under the impression that a DAC like the E50 could correct any jitter coming from the source. As this is a cheap DVD player, you could reasonably expect it to be quite jittery. So is what I'm hearing when listening to audio via the toslink input jitter, or is it something else? If so, what else could it be?
I should note that the E50 is outputting via RCA in this system, so not balanced. However, if there is an issue with a ground loop then I'd have expected the toslink input to sound better than the spdif, not worse!