It's redbook data. But both software (Itunes and Foobar) have the ability to convert to 24 bit before sending to the DAC. I'm fairly certain it's not volume control or any EQ settings, though I am exercising ITunes volume control when using the IPod Touch as a remote control. ITunes version 8's volume control works perfectly, as has been confirmed with both Benchmark and Steve Nugent.
There's a review of the Bryston BDA-1 DAC which has an upsample bypass to put out 16/44.1 and bypass the onboard upsampling. The reviewers comments are within the link below, but he hits the nail on the head by describing the difference between 16 and 24 bit upsample (from redbook) as a broader soundstage. Same thing I've encountered with the DAC1 when feeding 16 bit, although I've no way to tell if it's locking in at 16 bit or if it's upsampling on the DAC before final output.
http://www.computeraudiophile.com/bryston-bda-1-dac-review
There's a review of the Bryston BDA-1 DAC which has an upsample bypass to put out 16/44.1 and bypass the onboard upsampling. The reviewers comments are within the link below, but he hits the nail on the head by describing the difference between 16 and 24 bit upsample (from redbook) as a broader soundstage. Same thing I've encountered with the DAC1 when feeding 16 bit, although I've no way to tell if it's locking in at 16 bit or if it's upsampling on the DAC before final output.
http://www.computeraudiophile.com/bryston-bda-1-dac-review