I had the TEAC UD-501 for the past month. It works well with JRiver. Initially, people were not able to use JRiver's 2xDSD, but someone found a workaround (
http://archimago.blogspot.com/2013/09/howto-getting-jriver-mc19-2xdsd.html). The DAC works well with both PCM and DSD, but DSD is especially good. At the moment DSD only works if you use DoP output (it should sound the same as native DSD).
Overall impressions: I think the UD-501 is an excellent deal, even at the full retail price of $850. I have seen it as low as $795 (new) and about $700 used. The DAC has a nice smooth and slightly warm sound. Someone on Head-Fi mentioned this may be the analog lover's DAC, and I agree (I have the Clearaudio Concept turntable and Audio Research PH6 phonostage). I used to have the Benchmark DAC2 D ($1795), and sold it after getting the TEAC.
Problems: No real problems. One annoyance is that if the source is disconnected (e.g., when you are using USB input and turn off your computer for the night) the display will flash "USB unconnected!" in the brightest setting. I like to leave DACs on 24/7 so having the display flash like that is annoying. There is no way to turn it off, but you can turn off the display when the source is connected.
Best settings: This is highly dependent on your system and personal preference. For PCM (e.g., when watching TV/movies) I use Upsampling OFF and the SLOW filter. For DSD I like the FIR3 filter. If you want more detailed sound, try the SHARP filter for PCM, and the FIR2 filter for DSD. For music listening, I highly recommend using JRiver's 2xDSD upsample (at the moment it is not possible to output DSD for videos).
Maybe I can better assist you if you have more specific question.