I cant help with the different settings, I am presuming you are talking about on the DACmagic as opposed to the PC? As for USB, when you first plug in a small programme is installed on the PC and it should then work itself, irrespective of drivers. As for the quality of cables, again some say they can hear a difference as others cannot. I am in the cannot camp where it concerns USB and have no experience of digital/optical.
If you change the subject line from Re DAC connection? to Help please, connecting up a DACMagic, you should get more hits that will be relevant.