Could I make use of a DAC with my setup?

If you connect the external dac to analog in you bypass the dac on the P5 if you connect to any digital in on the P5 you use the P5 dac.

Something has to amplify the signal coming from the DAC, typically a pre-amp without a DAC and then the amp which drives the speakers. So something like this:

Computer---USB cable---DAC---RCA cable---Pre-amp---RCA (or XLR) cables---Amp---Speakers.

There is no end to what you can spend on a pre-amp, amp, DAC combo but companies like Schiit make affordable components to do just that. I just purchased one of their low end DACs (used) for my higher end system just to give it a try. It has not arrived.

Spotify files are fairly low quality. So in your case I doubt a better DAC than is in your pre-amp is going to help much although I do not have enough experience to say how much bypassing the headphone jack might help. Again, I think a lot of what you may want or need depends on how good the DAC in your pre-amp is. It might be better than many low end external DACs for all I know.

Again, take my answers with a grain of salt, I’m new to all this too. And if I’m talking down to you, my apologies....I don’t know what your experience level is....quite probably higher than mine.

For example you connect a cdp to the P5 on analog 1 on the P5 it is processed by the cdp dac. You connect the same cdp to digital in coax you use the dac on the P5 it's the same deal with an exteranl dac just connect analog in.

In your example you would do ....PC >dac> any analog input P5 > A23.  In this case you bypass the P5 dac. Whether you would notice any improved SQ , well you would have to determine that. 

OK, great, thanks for all your replies.  I did not know this, as I thought any input signal into the P5 preamp would go through its DAC.

This opens up a lot of things for me to think about!! :-)

And, yes, n80, I have been looking at the Schiit products, but just thought there was no way I could make one work for me.  :-)  Thanks for your thoughts about this.