Alternatively, have you confirmed that the DAC actually supports the number of channels you're sending? That is, do you have tracks with more channels than your DAC supports (i.e. a 7.1 source and a six channel DAC, or a 5.1 source and a 2 channel DAC, etc.)? The behavior you're describing would be expected if the DAC didn't support the number of channel outputs you're sending. Source number of channels should work if your DAC has enough outputs to map the channels to. If your DAC has enough output channels then something else odd is happening.
Also, can I suggest that you try the ALSA "plughw" output if you have one? The pure hardware ALSA outputs can be a little unforgiving about channel/sample rate combinations, while the plughw output (if available) is still hardware direct but is more forgiving of mismatched channel counts.
One thing I'll note is that the bitstreaming options look pretty different on Linux to me than the ones described on the Wiki. I don't have a Windows machine on hand anymore, but can anyone with a Windows machine confirm the bitstreaming options they have available? On Linux there is basically only one bitstreaming option and it's related to DSD only, and I recall the windows bitstreaming dialogue had way more options (like an option to bitstream all audio?).
