Jon,
It does not sound like you are feeding the DAC Magic a nice clean unmolested PCM signal.
1) I am guessing if you are using Napster then the sound is being routed via your Windows Mixer (probably no choice) which you have set to upsample, which is generally a bad idea.
2) What soundcard do you use that sounds as good as the DAC Magic ?
3) Do you use the USB connection or Toslink/SPDIF ?
When using an external DAC and a Windows PC, it is better to use the USB connection to ensure no molestion via the PC's soundcard SPDIF output, although this is not always an option if you are wanting to send the DAC 24bit audio as some DAC USB connections (your's included) only allow 16bit 44.1/48 PCM.
If you also bypass the Windows Mixer using in your case ASIO/WASAPI and send the audio via USB you should get "bit perfect" playback (ie the DAC receives the original audio in its native sample rate).
If you have use the Windows Mixer to listen to Napster, then ensure the Napster Application is set to Maximum volume and all other applications muted so as to avoid any mixing, although I am not sure this makes any difference in Vista but it should not sound worse.