Yes you will get probably even more of a jump in SQ by getting a decent DAC. The Helene is a superb DAC and is R2R with a tube output stage, so a very natural sound AND linear as well.
I for one am someone who swears by physical CD playback. Streaming that can compete is either expensive or requires great effort to get it right, at least from my experience. Usually I hear more natural playback from physical CD (in particular with reclocker), streaming tends to sound more synthetic, regardless if CD format or "hi-res".
I have to question whether a new standalone DAC would provide objectively better sound, or just a different sound. I doubt that an Yggdrasil would be an improvement on the X1 DAC, but it would be different. I know of audiophiles with very sophisticated network audio systems built around the X1.
I have tried a USB drive connected to my exaSound PlayPoint and found it lifeless compared to the cleaned feed from my NAS. If this were my decision, I would rip my CDs to a new Lumin L2, plug my router into the L2 and connect to the X1 via fiber optic cable, with the top quality Finisar SFPs. Connect the CD player digital output to the X1. That's a primo digital system, with much improved streaming quality.
"Sure, you have a multiplicity of streamers, streamer/DACs, and streamer/DAC/ preamplifiers to choose from these days, and, alas, the Lumin X1 is only one of them (to steal an ancient audiophile cliché). But it’s an outstanding one that gets everything right and does it all with style."