To be clear, if
Tools > Options > Audio > Settings > Bitstreaming is set to
DSD, then MC does not decode the DSD files at all and sends them directly as-is to your DAC. This means your DAC needs to be able to understand the exact file format provided. Playing "static" is the typical failure case for playing a format that a DAC does not understand.
Media Center can also decode DSD files to PCM and send the PCM to your device. If this is what you want, then you need to have the bitstreaming turned OFF.
You can also set Media Center to send ALL otherwise unsupported audio to your DAC in DSD formats via the DSP > Output Format > Output Encoding tool. But
that would only apply to PCM audio which is processed by MC's audio engine (stuff not bitstreamed), and is probably not a good idea unless your DAC requires it (
I agree with 6233638 on this).
So, I'm not sure what you have set up here, and I don't really know very much about DSD. It may be that your DAC is not compatible with the format, or that the driver you've used to set it up is not compatible. For it to work with MC,
your DAC must support DSD over DOP.
For caiper in particular, it sounds like it is misconfigured (and that converting to DSD is enabled in Output Format). As I said, that's almost certainly NOT what you want, and that setting will not apply to any DSD-native files. Hopefully this helps.
Please also read:
http://wiki.jriver.com/index.php/DSD_Format