After much searching I found a partial solution on Adafruit. I started afresh with a clean install of VolumioBeta1PI on a new SDHC card (10G, Class 10). Once running I did the following:
Boot the Raspberry Pi with the USB DAC plugged in, then list USB devices
This reveals the USB DAC is a C-Media Electronics, Inc. CM108 Audio Controller
Update the package list
$ sudo apt-get update
Accept the notification on disc space, then once completed install the following
$ sudo apt-get install git-core
$ sudo wget https://raw.github.com/Hexxeh/rpi-update/master/rpi-update -O /usr/bin/rpi-update
$ sudo apt-get install binutils
$ sudo chmod +x /usr/bin/rpi-update
$ sudo BRANCH=next rpi-update
Edit the alsa configuration
$ sudo nano /etc/modprobe.d/alsa-base.conf
Change the line: #options snd-usb-audio index=-2 to be: options snd-usb-audio index=0, then Close and Exit (Ctrl O, Ctrl X).
$ sudo reboot
Music now plays through the USB DAC without continuous distortion, fidelity is better than the on-board audio output. There are occasional stutters and clicks, I’m still working on the UI settings to see if these can be eliminated using the settings. It is not perfect but I’m moving forward. I am happy that the power supply is not an issue, I am using a 5V, 2A Apple iPad charger with an extremely large capacitor added, to remove ripple and provide some ballast.
Sorry if these instructions are not laid out following any particular convention but i think they should be easy to follow.
Now I need to investigate CIFS sharing as I can’t reach the Music directory on my NAS…