I recieved the meridian 518 2 days ago, it appears brand new which is nice. First I hooked the DAC up directly to the amp and used the 518 as a digital pre between the 500 and the DAC. This worked but switching inputs made a really loud popping/clicking noise that did not sound good at all. So I put the TLC-1 back in between the DAC and amp and used Type 1 on the 518 which is as a processor only with controllable gain (-99 to +12dB), the clicking sound is still there, but I can now turn down the passive pre and avoid having it sound like the click/thumping is going to destroy my speakers.
Anyway, the 518 does make a pretty big difference. It does so many things that it's hard to quantify the changes. Adding pre-emphasis really makes cd's bright and high end shines on most cd's. I haven't used all of the noise shaping options, but the high-pass with the pre-emphasis seems like a good combo so far. It also seems to have sharpened the focus of the stage, making it even more wide and deep, but also pinpoint placement. I'd like to be able to use it as intended, skipping the passive pre altogether, so I posted the problem on the hitchikers guide to meridian site and several people have responded. We'll see how it turns out. Someone mentioned switching cables fixed the problem for them (using VanDenHuls) so I tried the kimber heroes instead of the AVT-1 but it made no difference. I also want to switch out the straightwire aes/ebu with another mit, but I'll have to wait on a good deal since they're $800 retail.
I would also like to pass all the digital signals from dvd and a/d converter through it, but the input switching noise really makes that undesirable. I called meridian america about it and they said that was normal behavior of the relays switching and sending out a digital thump, annoying.