Ok Frank, here we go
To answer your first question, my DAC is powered by a wallwart power source. It should not be taking power from the RPI.
Second, I followed the protocol outlined in your link. Changed the mpd.conf file to add format "*:16:*" in its correct location, and then rebooted MPD as per the command prompt. With this modification I was able to navigate through my library and queue songs, but the same issue persisted (a few flashes, 2 seconds of play time, and then stopping).