Did you check the Status Overview screen? It will tell you when PCM or DSD comes in and at what sample rate etc. Recreate the error condition and tell us what you see.

Then, as soon as you have this info, go to SETUP - Options - Phones / DSD - DSD Detection and set it to Off. Sound is back?

Matthias and Ning, thank you for your replies.  I have checked the State Overview screen while attempting to play PCM via USB and it shows the following:

Input     Sync     SR     State     Bit
SP o         --        --        --         --
SP c       sync     44.1   cons     16
USB       conn     44.1   2/2       

Clock Source     INT

Two things to note here: for SP c, the Sync heading changes back and forth from "sync" to "lock" every few seconds or so.  There has been a CD player connected to the other end of the coaxial during this ordeal, however no disc is present and the machine has remained off in standby.  The other thing to note is that for USB, under the Bit heading, there is nothing: blank; this is while the X10-Tii has been playing PCM material.  If I switch to an album with a different PCM samplerate, the SR will change to match, but still shows blank under the Bit heading.

Once I made note of these things, I turned DSD Detection to "Off" and nothing changed.  The same issue persists when attempting to play PCM.  I restarted both devices after the change, no difference.  I should also note that I am using line out with +7 volume as my output setup, but I doubt that matters.

Thank You Both for your continued support and advice.

Once the SPDIF coaxial cable is removed, there is no change.  I still get visual recognition of the sample rate based on the type of PCM I am trying to play, but nothing in the meters and no sound.  The State Overview screen of course of now shows "--" across the board for SP c.  USB shows the usual "conn, (insert sample rate here), 2/2, and a blank bitrate.  I also toggled the DSD Detection after removing the cable and retstarted both devices: no change.

Ning, I am a bit curious as to your previous comment.  I understand you do rigourous testing as a software developer for DAPs, but if you have not specifically tested the X10-Tii, I do not understand why you dismissed my issue ("USB does not have the issue you reported).  I would like to reiterate that I have had no issues using the X10-Tii via USB-C with any other device, PCM or DSD.

I also forgot to mention that I make it a habit to select my source with the remote control upon powering on the 2 DAC FS, so no auto select issue either.

Kai, I do have a CD player to use as a source, but it has a failing laser and the disc-less X10-Tii digital transport was not only meant to replace it eventually, but serves to give me access to all the higher res music I have purchased over the years without needing to use a computer.  As mentioned, I can temporarily use a portable DAP in the meantime but I really prefer to get the X10-Tii working as it was much more expensive and has a much better battery.  I just don't understand what the issue could be.

Reading your first post again after all it looks like the xduoo's Class Compliant USB implementation is incompatible to the ADI-2 DAC. Maybe it doesn't like that it only supports 32 bit mode and then mutes its output, so no audio data is sent to the ADI at all. Just a theory, and does not explain why it works with DoP mode. I see no way to solve this easily, sorry.

I don't have any other USB-C to USB-B cables to try it with, Jr. Radnev.  I bought this one brand new (of very decent quality) recently and specifically for this usage.  The existing cable works perfectly with a Shanling M0 ---> DAC-2: any/all formats & any/all sample rates.  I think that proves the cable is not the issue.  Hope this also answers Kai's most recent question.

I am extremely upset and angry with Xduoo.  Before posting here, I sent them an e-mail about a week ago describing the issue that has apparently been ignored.  I wasn't sure if the problem was with Xduoo (works with everything else except ADI) or if the problem was with ADI (works with everything else except Xduoo).  At the very least I thought I would get a response from Xduoo containing technical data that I could provide here to ADI.

It makes no sense to me that a device with no output stages, op-amps, or DAC decoding capabilities -- a device specifically made exactly for this sort of usage -- and more than 2.5 times the cost of an average standalone DAP -- could ship with this type of compatability issue with what I hoped to be the last DAC (ADI) I needed for the forseeable future.

Matthias, I really hope there is someting ADI can do to make the device more compatible with other class-compliant varieties because for something so versatile and with so much R&D put into it,  it deserves maximum  compatibilty.  Customers generally have no way to know if their device will be compatible until something like this happens, and it's a most unwelcome surprise. I know this may not be easily solved, but if your team can slowly work on it that would mean a lot to me.  I don't care if it's included in a firmware update 6 months from now, if that's how long it takes to do it comfortably.  I'd rather get these compatible in time vs. not at all.

I'm sorry I don't have any more data about the situation.  I did reflash the ADI firmware to see if that made a difference, and it did not.  For the time being, I will have to settle for not being able to use the X10-Tii via USB-C, although this restricts me from DSD128 and higher.  I only have a few albums at this level anyway, but it's the idea that bothers me most.

I just don't see any good reason for it not to work, or be made to work.  Thank You All.

Edited to Add:  What continues to remain most bizarre about this situatiuon is that the X10-Tii via USB-C DOES WORK with DSD (64 & 128), just not PCM.  It's as if there's some little oversight somewhere that just needs addressing as it isn't a complete failure of compatibility.  For me however, with 90% of my library being PCM, it feels like one.  Matthias, again, I appreciate your responses and theoretical insight into the situation.  Please don't take my response as disrespectful.  I do not approach your technical knowledge.  To drop about $1,500 USD on two devices, with the intent they will play well together and seeing no reason for them not to, but end up being incompatible at USB level is hard to swallow.