Thanks everyone for the advice--this forum is truly a fanatastic resource and I want to thanks everyone for taking the time to provide the suggestions above. Happy Easter to all.
I am running windows Vista. The output level was running at max.
I am making some progress! Sheepishly (as Mahler suggested artifact is not a bit perfect problem), much of the noise was due to loosening of the usb cable underneath the touchsmart cable cover. There is still some output quality difference from Vista on the Touchsmart, as I compared it with identical files to a macbook also running iTunes. The bass from Vista is just more muddled, so I am starting to work through the other tweaks suggested above by trying the bypass with an ASIO plugin to j river. I will make note of what I find out as I figure out more about the options.
There also seems to be some definite influence of the devilsound dac as that does color the music when i compare both the touchsmart and mac output through it versus my cd player. The highs aren't handled as well and the bass seems boosted so that acoustic music doesn't sound as clear, but interestingly i think that busier passages sound better esp. rock. I Will therefore also plan to demo some higher end DAC's to compare the impact. My system is fairly warm as it is tube based, maybe the DAC can affect that further? I have no experience with one prior to the Devilsound cable.
Thanks again all.