You are probably thinking that you need to set the Output Format > Output Encoding to play DSD. That's not what that setting is for. That setting is to convert *everything* to DSD on the fly. This is to be used if you have a DAC that ONLY plays DSD. It's almost never correct to use that setting.
You don't need to manually switch to play DSD and PCM. By default, DSD is converted to PCM at 352.8 kHz, so will play to any PCM DAC. If you have a DSD capable DAC, you can turn on bitstreaming for DSD. When MC sees a DSD file, it will pass it straight through to the DAC with no conversion, no EQ, no nothing. Just straight DSD to the DAC.
Tools > Options > Audio > Settings > Bitstreaming > DSD
It's automatic once that's set. Play PCM and it goes through your PCM rules in DSP Studio. Play DSD and it gets bitstreamed.
Or leave bitstreaming OFF and DSD gets converted to PCM on the fly. Either way, it's automatic; no switching required.
Brian.
PS: The Donkey (who is Awesome) seems to have said all of this in a much shorter way, while I was typing a small book...